ABC Co. bought a piece of land three years ago for $200,000. Today, the firm is considering a project to build a warehouse on the land. The cost of building the warehouse will be $600,000. As required by the county by-laws for warehouses, a land survey is conducted at a cost of $20,000, and the company is advised that the land must be improved (with drainage, power lines, sewage system, etc.) before a building can be safely constructed on it. These land improvements will cost approximately $1,000,000. However, if the firm does not develop this land, it can also be sold for $500,000. Which of the following is correct regarding developing this land for the warehouse project? Select one: O a. Opportunity cost is $500,000 and total investment cost is $1,620,000. O b. Opportunity cost is $500,000 and total investment cost is $2,120,000. O c. Opportunity cost is $720,000 and total investment cost is $1,600,000. O d. Opportunity cost is $720,000 and total investment cost is $2,100,000. O e. Opportunity cost is $500,000 and total investment cost is $2,320,000.
