You are considering expanding your current operations. In anticipation of a previous expansion ten years ago, which did not go ahead due to the economic conditions at that time, you bought a piece of land for only $100,000 dollars. Today it could be sold for $500,000. Your tax rate is 35%. Cost of capital is 13%. Should the land be considered a cost to the current expansion? If so what value will you assign to that cost?

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The Answer of You are considering expanding your current operations. In anticipation of a previous expansion ten years ago, which did not go ahead due to the economic conditions at that time, you bought a piece of land for only $100,000 dollars. Today it could be sold for $500,000. Your tax rate is 35%. Cost of capital is 13%. Should the land be considered a cost to the current expansion? If so what value will you assign to that cost?

You Are Considering Expanding Your Current Operations