Financial accounting questions Kelly's Corner Bakery purchased a lot in Oil City five yearsago at a cost of $600,000. Today, that lot has a market valueof $725,000. At the time of the purchase, the company spent$55,000 to level the lot and another $4,800 to install stormdrains. The company now wants to build a new facility onthat site. The building cost is estimated at $1,075,000. Whatamount should be used as the initial cash flow for thisproject?

Step 1: Initial Cash FlowThe outflow of cash that is required to initiate any project to earn future…

Answered: Kelly's Corner Bakery purchased a lot…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 14P

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Kelly's Corner Bakery purchased a lot in Oil City 6 years ago at a cost of $302,000. Today, that lot has a market value of $340,000. 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 $1.51 million. What amount should be used as the initial cash flow for this project?
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Give typing answer with explanation and conclusion
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