Kelly's Corner Bakery purchased a lot in Oil City six years ago at a cost of $278,000. Today, that lot has a market value of $264,000. At the time of purchase, the company spent $6,000 to level the lot and another $8,000 to install storm drains. The company now wants to build a new facility on that site. The building cost is estimated at $1.03 million. What amount should be used as the initial cash flow for this project?
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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?Kelly’s Corner Bakery purchased a lot in Oil City 6 years ago at a cost of $302,000. Today, that lot has a book value of zero and 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, and will be depreciated using the straight-line method to a $400,000 book value over the 6-year life of the project. The company is evaluates this new facility will increase annual sales by $1.2 million and annual cash costs by $0.5 million. Based on past information, the company believes that it can sell the facility for $800,000 when they are done with it in 6 years. The applicable tax rate is 32 percent. What is the net present value of the project if the required rate of return is 10 percent?Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land 5 years ago for $7,385,474 in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent these facilities from a competitor instead. If the land were sold today, the company would net $3,944,875. An engineer was hired to study the land at a cost of $617,920, and her conclusion was that the land can support the new manufacturing facility. The company wants to build its new manufacturing plant on this land; the plant will cost $5,838,309 to build, and the site requires $994,648 worth of grading before it is suitable for construction. What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project?
- Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land 6 years ago for $5,397,921 in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent these facilities from a competitor instead. If the land were sold today, the company would net $3,370,355. An engineer was hired to study the land at a cost of $559,424, and her conclusion was that the land can support the new manufacturing facility. The company wants to build its new manufacturing plant on this land; the plant will cost $4,394,972 million to build, and the site requires $1,358,566 worth of grading before it is suitable for construction. What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project?Company A purchased a corner lot five years ago at a cost of $134000. The lot was recently appraised at $119000. At the time of the purchase, the company spent $2100 to grade the lot and another $24000 to build a small building on the lot to house a parking lot attendant who has 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 $126000. What amount should be used as the initial cash flow for this building project?Kelly's Corner Bakery purchased a lot in Oil City six years ago at a cost of 100000. Today, that lot has a market value of $120000. At the time of the purchase, the company spent $6,500 to level the lot and another $12,000 to install storm drains. The company now wants to build a new facility on the site at an estimated cost of $500000. What amount should be used as the initial cash flow for this project?
- The Square Market has decided to expand its retail store by building on a vacant lot it currently owns. This lot was purchased four years ago at a cost of $299,000, which the firm paid in cash. To date, the firm has spent another $38,000 on land improvements, all of which was also paid in cash. Today, the lot has a market value of $329,000. What value should be included in the analysis of the expansion project for the cost of the land? a) The sum of the cash paid to date for both the lot and the improvements b) The current market value of the land plus the cash paid for the improvements c) The current market value of the land d) Zero because the land and the improvements were purchased with cashAn eco-industrial park has a manufacturing plant which purchased a lathe machine for P57,500 seven years ago. A reserve for machine replacement has been provided using straight-line depreciation accounting its 20 years life span. The plant manager has decided to replace the old machine with a newer model costing P95,000. The manager can sell the old machine for P17,500. What is the amount of the additional capital needed to purchase the new machine?&J Industries is considering a new project. Prior to making this decision, the company hired a consultant, at a cost of $24,160, to determine the viability of this new project. The project will require $286,600 for the purchase of the new machine. There will be $11,000 in delivery charges and $1,550 will be spent on a technician to calibrate the machine. The plan is to set up the new machine on land that the company currently owns. The land was purchased many years ago for $10,000 and currently has a market value of $30,000. The new project will require an additional $1,300 in inventory, $970 in accounts receivables and accounts payable is expected to increase by $1,000. The new machine belongs in a 30% CCA class. Because the industry is changing rapidly, the equipment will be obsolete in 5 years with no salvage value. The net working capital will return to its original levels at the end of the project. The project is expected to generate additional revenues of $40,200 and expenses…
- Sampson Corporation is contemplating the purchase of a new high-speed widget grinder to replace the existing grinder. The existing grinder was purchased two years ago at an installed cost of $60,000; it was being depreciated under MACRS, using a five year recovery period. The existing grinder is expected to have a usable life of five more years. The new grinder has a cost of $105,000 and requires $5,000 in installation costs; it has a five year usable life and would be depreciated under MACRS, using a five year recovery period. Sampson can currently sell the existing grinder for $70,000 without incurring any removal and cleanup costs. To support theincreased business resulting from the purchase of the new grinder, accounts receivable would increase by $40,000, inventories by $30,000 and accounts payable by $58,000. At the end of five years, the existing grinder would have a market value of zero; the new grinder would be sold to net $29,000 after removal and clean up costs and before…Two years ago, Amys Inc. purchased land at a price of $3,000,000 plus $460,000 in real estate costs. Today, this new land has a market value of $4,000,000. The firm is now considering building a factory on that land. The construction cost of the factory is estimated at $295,000. In addition, $70,000 worth of leveling the surface of the land will be required to prepare the construction site. What is the initial cash flow of this project? Explain your answer in detail.WTF Ltd is considering replacing its old fully depreciated forklift with a new model. Two months ago, WTF paid LMAO Consulting $14,000 in consulting fees to help them evaluate the various forklifts on offer. Your manager suggests this consulting fee be spread over the life of the project. The cost of the recommended forklift is $52,000. The consultants estimate the old forklift will be able to be sold today for a salvage value of $20,000. In addition, WTF has estimated it will need to increase its holdings of inventory from $7,000 to $36,000 at the start of the project. The company tax rate is 30%. What is the total cash flow at the start of the project (report your answer to the nearest dollar)?