If a project uses an asset the corporation already owns,the cost of that asset for capital budgeting purposes is zero to reflect the advantage the project has over projects that require the purchase of new assets.

Question

Quizplus · Accepted Answer

The cost of an asset for capital budgeting purposes is not zero just because the corporation already owns it. The opportunity cost of using the asset in the new project, which could include potential rental income if the asset were leased out or its sale value if it were sold, must be considered in the project's analysis.

If a Project Uses an Asset the Corporation Already Owns,the