In the given problem the company is considering opening a plant in China which shall provide the anticipated gross profit of $4,500,000. The costs of the project include
$3,500,000 to set up the plant and $800,000 to train employees, and an additional $160,000 to build relationships with the local suppliers.
So the total cost of project is 3,500,000+800,000+160,000 = $4,140,000
Now the net benefit from the project shall be 4500,000 – 4140,000 = $360,000
Hence we can say that the benefits outweigh the costs by $360,000.
