Problemmercier lumber co spent 12 million in research and, Ask an Expert

Finance

Problem:

Mercier Lumber Co. spent $1.2 million in research and development costs to devise a new cutting machine. The firm now wants to build a new building to house the new machine and expand its operations. The building will cost $670,000 and the machine can be built for $348,000. The building will be placed on land which the firm acquired nine years ago at a cost of $139,000. The land is currently valued at $155,000.

Required:

What initial cost should the firm use to analyze this expansion project? Explain comprehensively and also provide formulas and calculations.

A. $1,018,000

B. $1,173,000

C. $1,157,000

D. $2,373,000

E. $2,218,000

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91147271

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