**Case Study: Evaluating the Initial Investment for a Manufacturing Plant**Parker & Stone, Incorporated, is considering the establishment of a new manufacturing plant in South Park for the production of garden tools. Originally, the company purchased land 6 years ago for $5 million with plans to use it as a warehouse and distribution site. However, the company has opted to lease these facilities from a competitor instead. Currently, selling the land would generate a net of $9.2 million.The plan involves constructing a new manufacturing facility on this site. The cost of building the plant is projected to be $14.2 million. Additionally, the site requires grading work, estimated at $828,000, to prepare it for construction.**Question:**What is the appropriate cash flow amount to consider as the initial investment in fixed assets for evaluating this project?**Options:**- $22,572,000- $24,228,000- $23,400,000- $25,439,400- $19,058,880**Instruction:**Consider all relevant costs and potential revenue from the sale of the land to determine the proper cash flow amount for the initial investment.

Cash flows to be used as initial investment in fixed asset will include :Sales value of the land…

Answered: Parker & Stone, Incorporated, is…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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