Question

How to connect the rate of returns from warehousing business and their gestation period

Answer 1

cash flows to the present time, using the required corporate rate of return. In developing a NPV calculation, it is helpful to sketch the relevant cash flows over

Answer 2

The answer is stated below:

Explanation:

• Warehousing comprise of the portion of logistics which is the total of the following:
• Operating cost of warehousing
• Inventory cost of warehousing
• Handling cost
• Transportation cost

All the cost of warehousing are a mixture of variable as well as fixed cost. The fixed cost in the account of warehousing for more than half of the total costs in the operation.

Warehouse is the industry of capital intensive, which has relatively high rate of fixed assets. Idle land for the construction of warehouse is not often available and whenever it is available then it is prohibitive.

Therefore, the rate of returns from the business of warehouse is very low and the gestation period is very long. So, warehouse need support of government.