A scuba diving school has been given the opportunity to purchase a sunken shipwreck for just $10,000, giving trainee scuba divers the opportunity to navigate through the ship as part of their training. They are now considering a project to set up a new training course built around access to the ship. If the course is unlikely to be profitable, the sunken ship can be sold to another scuba diving school that is interested in acquiring it. How would you treat the cost of the ship for the purposes of the NPV analysis for the new training course? Question 1Answer a. There is a sunk cost to the value of $10,000. b. There is a negative externality to the value of $10,000. c. There is a positive externality to the value of $10,000. d. There is an opportunity cost to the value of $10,000.
A scuba diving school has been given the opportunity to purchase a sunken shipwreck for just $10,000, giving trainee scuba divers the opportunity to navigate through the ship as part of their training. They are now considering a project to set up a new training course built around access to the ship. If the course is unlikely to be profitable, the sunken ship can be sold to another scuba diving school that is interested in acquiring it. How would you treat the cost of the ship for the purposes of the NPV analysis for the new training course? Question 1Answer a. There is a sunk cost to the value of $10,000. b. There is a negative externality to the value of $10,000. c. There is a positive externality to the value of $10,000. d. There is an opportunity cost to the value of $10,000.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
A scuba diving school has been given the opportunity to purchase a sunken shipwreck for just $10,000, giving trainee scuba divers the opportunity to navigate through the ship as part of their training. They are now considering a project to set up a new training course built around access to the ship. If the course is unlikely to be profitable, the sunken ship can be sold to another scuba diving school that is interested in acquiring it.
How would you treat the cost of the ship for the purposes of the NPV analysis for the new training course?
Question 1Answer
a.
There is a sunk cost to the value of $10,000.
b.
There is a negative externality to the value of $10,000.
c.
There is a positive externality to the value of $10,000.
d.
There is an opportunity cost to the value of $10,000.
AI-Generated Solution
AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.
Unlock instant AI solutions
Tap the button
to generate a solution
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education