Supposed Honda spent $2.1 million to investigate sites for a potential new plant in China. After completed
Question:
Supposed Honda spent $2.1 million to investigate sites for a potential new plant in China. After completed the analysis, Honda found that it must spend an additional $30 million to build and supply the plant. Furthermore, Honda owns land with a current market value of $10 million that can be used for the new plant if it decides to build the new plant. As a result, if Honda goes ahead with the project, only $20 million will be required, not the full $30 million, because it will not need to buy the required land. With the opening of the new plant, it will cost the company $5.0 million initially to meet environmental regulations.
In the evaluation of this new plant project, what should be the initial cash flow at year 0?
Supply Chain Management Strategy Planning And Operation
ISBN: 9781292257891
7th Global Edition
Authors: Sunil Chopra