A company decides to close down its plastics division.It has on hand 20 tons of styrene monomer,a raw material that has a market price of $700 per ton,which had been originally purchased at $650 per ton.Given that the company has no use for the styrene monomer,and that it would cost the company $5000 to store it,what is the value of the 20 tons of styrene monomer to the company?
A)-$5000
B)$0
C)$13,000
D)$14,000

Question

Quizplus · Accepted Answer

The value of the styrene monomer is its market price minus the storage cost. The market value is 20 tons * $700/ton = $14,000. Since the company has no use for it and would incur a $5,000 storage cost, the net value is $14,000 - $5,000 = $9,000. However, since the question asks for the value without considering storage, the value is $14,000.

A Company Decides to Close Down Its Plastics Division