Problem:

Marshalls & Co. Purchased a corner lot in Elgon City five years ago at a cost of $750000. The lot was recently appraised at $815,000. At the time of the purchase, the company spent $55,000 to grade the lot and another $3900 to build a small building on the lot to house a parking lot attendant who was overseen the use of the lot for daily commuter parking. The company now wants to build a new retail store on the site. The building cost is estimated at $1,180,000.

Required:

Question: What ammount should be used as the intial cash flow for this bulding project?

Note: Please show how you came up with the solution.