Siclan Company Problem The Siclan Company is considering opening a new office. The company owns...
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Accounting
Siclan Company Problem
The Siclan Company is considering opening a new office. The company owns the building and would sell it for $74,000 after taxes if it does not open the new office. The building has been depreciated down to a zero book value. The equipment that will be used in the building costs $69,000. The equipment that would be used has a 3 year tax life, depreciated straight-line, with 0 scrap value. (If the company tried to sell the equipment at end of year 3, it would receive 0 sales proceeds). (There will be no new revenues after the end of year 3.) No new working capital is required.
Cost of Capital = 15%
Due to opening the office and using the equipment, additional annual Revenues = $100,000
