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Problem:

Kenny, Inc., is looking at setting up a new manufacturing plant in South Park. The company bought some land six years ago for $8.6 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent facilities elsewhere. The land would net $11.4 million if it were sold today. The company now wants to build its new manufacturing plant on this land; the plant will cost $22.6 million to build, and the site requires $1,010,000 worth of grading before it is suitable for construction.

Required:

Question: What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project?

Note: Please show how to work it out.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91162230

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