Question

Disc 10: Original post due Sunday, November 17; replies to others due Tuesday, November 19 Bob Waldorf is in charge of buying property to be used as branch office sites for the Kenner National Bank (KNB). Mr. Waldorf paid $120,000 in July 2017 for a lot (Site A) located in a growing section of the city. Early in 2019, Mr. W has a chance to purchase a better lot (Site B) for $80,000. The traffic count for Site B is twice the traffic count for Site A and has a much bigger parking lot. Mr Waldorf believes the current market price for Site A is now about $100,000. He thinks it would be in the bank's best interest to sell Site A and purchase Site B but he doesn't want to look bad in the eyes of his boss, Fred Mullet (even though Mr.M has made plenty of bad decisions himself). In any case, Mr. W must get Mr. Mullet's permission to sell Site A and then purchase Site B. Required: 1. Determine the amount of the loss that would be recognized if the Site A were to be sold for $115,000. Show all calculations. 2. Identify the type of cost (sunk, opportunity) that is represented by the original $120,000 paid for Site A. Is this cost relevant to decision-making? Why or why not? (2-3 sentences) 3. Identify the type of cost (sunk, opportunity) that is represented by the $80,000 cost of Site B. Is this cost relevant to decision-making? Why or why not? (2-3 sentences) 4. Name two other important qualitative or quantitative facts that Mr. Waldorf would like to know about one site or the other before bringing the proposal to Mr. Mullet? (Use your imagination; DO NOT use information already provided in the case. 3-4 sentences)

help pls

Answer 1

Answer ! The Buying property to be used as branch office setes = 120.000 The selling price = 104.000 Loss to be recognized by selling site I ts) 1120,000-140,000) z 16.000 Cost of sale A a sunk as it has been already purchased caste are borelevant in decenas Cast incurred in the past cost of a resource already acquired. Current market value of sit B is opportunity cost it represents the value sacrificed fag one by. Sile À

Opportunity cast are relevant in decision ® making as they help in calculating the amout B we have made a profil = 4,000 Current Market price A = 100,000 Current Market police B = 80.000 ={100,000 - 80,000) Saving in cost = 20,000 Loss incurred by selling À = 16,000 (20,000- 16,000) net pordel 4,000 Site B has bigger parking cast of sit. A = 120,000 selling price A = 104,000 .-> (120,000-104,000)

cost of site: selling price) (190,000 - 10.000) Recognized by selling site A = 16,000 Cost of site A already purchase . Either historical costs incurred in the past Cos? of a sicoce aloneady aceleiad =) Cost in respect of with a decision is already . made in the past by any futier decision - Current marked value of sile - opportunity cast as it represend the value forgaone by selecting A Decision making as they help in calceiting the amount of profit a loss might occur by choosing =) other factors that can be shown

By peischasing site D @ we have made profit of = 4,000 Current moket pria sita = 100.000 Current Market price site B = 80,002 ..=> (100,000 - 80,000) Saving cost = 20,000 Loss incurred by selling site a = 16.000 :(20,000-16.000) 41000 Net profil = 4.000 B has much bigger parking lot.