A temporary warehouse can be built for $10 million and its salvage value when decommissioned is zero. The annual revenue from the sale of storage space minus maintenance and operating costs is estimated at $3 million. If the attractive minimum rate of return is 13% per year and the warehouse is used for 8 years, does the investment matter? What is the minimum useful life for the construction to be interesting?

A temporary warehouse can be built for $10 million and its salvage value when decommissioned is zero. The annual revenue from the sale of storage space minus maintenance and operating costs is estimated at $3 million. If the attractive minimum rate of return is 13% per year and the warehouse is used for 8 years, does the investment matter? What is the minimum useful life for the construction to be interesting?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 13P

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