1 base builders inc purchased a lot in phoenix 10 years ago, Ask an Expert

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1. Base Builders, Inc. purchased a lot in Phoenix 10 years ago at a cost of $380,000. Today, that lot has a market value of $350,000. At the time of the purchase, the company spent $15,000 to level the lot and another $20,000 to install storm drains. The company now wants to build a new facility on that site. The building cost is estimated at $1.9 million. The amount that should be used as the initial cash flow for this project is: -$2,250,000. NOW SHOW YOUR WORK HOW YOU ARRIVED AT THIS FIGURE/AMOUNT.

2. Consider a profitable company with an asset that costs $500,000 that is depreciated straight-line to zero over its 8-year depreciable tax life. The asset is to be used in a 5-year project; at the end of the project, the asset can be sold for $90,000. If the relevant tax rate is 35%, the after tax cash flow from the sale of this asset (after-tax salvage) IS $124.125 - NOW SHOW YOUR WORK IN DETAIL (HOW DID YOU ARRIVE AT THIS NUMBER?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92100053

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