Disney will build a new ride for “Frozen” at the Epcot theme park. The ride will replace the Maelstrom ride at the Norway pavilion. Suppose that the “Imagineers” have priced out the ride, and they think they can use some old ride vehicles and equipment from the retired Snow White ride. If the project is rejected, the equipment could be sold to another amusement park for $100,000. The equipment has been fully depreciated. If the tax rate for Disney is 37%, what is the opportunity cost of using the Snow White equipment?
Market value Book value Tax rate
$100,000 $0.00
Opportunity cost of old ride equipment