Company A is deciding whether to invest in opening a new plant. The company paid $200,000 for market research that helped to estimate new plant's annual revenues of $10 million. However the company will lose sales of the old plant due to opening of a new plant of $1 million per year. The company needs to acquire land for this purposes for $1 million and will use available construction materials that cost $2 million to build this plant. If not used the company will sell the materials at $2 million. Which of the described revenues and costs are relevant (incremental) in determining whether to invest in this project or not?

Question

Answer

Revenues of $9 million and cost of land of $1 million.

Answer

Revenues of $9 million, cost of land of $1 million and cost of construction materials $2 million.

Answer

Revenues of $10 million, cost of land of $1 million and cost of construction materials $2 million.

Answer

Revenues of $9 million, cost of market research of $200,000 and cost of land of $1 million.

Answer

Revenues of $10 million, cost of market research of $200,000 and cost of construction materials $2 million.

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Company A is deciding whether to invest in opening a new plant. The company paid...

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