2.
a.
Capital Expenditure
1.
If the spare warehouse space will be used now or in the future for a
different project, then this project should be credited with these
benefits.
2.
Charge opportunity cost of the land and building.
3.
The salvage value at the end of the project should be included.
Research and Development
1.
Research and development is a sunk cost and should not be
included.
Working Capital
1.
Will additional inventories be required as volume increases?
2.
Recovery of inventories at the end of the project should be included.
3.
Is additional working capital required due to changes in receivables
and payables?