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A company is planning to build a new plant to replace

an older one that is to be demolished. The alternatives are: continue to

operate the old plant or demolish the old plant and build a new one on the land

where the old one used to be. Which of the following flows to consider in the NPV

calculation of the project where we build a new plant? Select only one answer.

TAX CREDITS ON THE

INVESTMENT

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Answers a c d and f

❌

Costs

OF BUILDING ACCESS ROAD INCURRED

IN THE PREVIOUS YEAR

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PRODUCTION LOSSES WHILE AN

OLD PLANT IS DEMOLISHED

and a new one is being built

❌

Answers a c d and e

✅

Demolition costs

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DEPRECIATION

of the plant; yes or no? (Think

about the potential impact on taxes)

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Part of the

SALARY OF THE

MANAGING DIRECTOR

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