Problem 10-1 Relevant Cash Flows [LO1] Parker & Stone, Incorporated, is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $5.7 million 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 $6 million. The company wants to build its new manufacturing plant on this land; the plant will cost $13.2 million to build, and the site requires $840,000 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? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) Answer is complete but not entirely correct. Cash flow amount $ 18,780,000 ×
Problem 10-1 Relevant Cash Flows [LO1] Parker & Stone, Incorporated, is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $5.7 million 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 $6 million. The company wants to build its new manufacturing plant on this land; the plant will cost $13.2 million to build, and the site requires $840,000 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? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) Answer is complete but not entirely correct. Cash flow amount $ 18,780,000 ×
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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![Problem 10-1 Relevant Cash Flows [LO1]
Parker & Stone, Incorporated, is looking at setting up a new manufacturing plant in South
Park to produce garden tools. The company bought some land six years ago for $5.7
million 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 $6 million. The company wants to build its new
manufacturing plant on this land; the plant will cost $13.2 million to build, and the site
requires $840,000 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? (Do not round intermediate calculations and enter your answer in dollars,
not millions of dollars, e.g., 1,234,567.)
Answer is complete but not entirely correct.
Cash flow amount
$
18,780,000 ×](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3b09f96e-cd9c-4536-8b3e-e1e13b312dc8%2F72ca2c18-083e-4e41-8460-097b29417d42%2F1g1qx5j_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 10-1 Relevant Cash Flows [LO1]
Parker & Stone, Incorporated, is looking at setting up a new manufacturing plant in South
Park to produce garden tools. The company bought some land six years ago for $5.7
million 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 $6 million. The company wants to build its new
manufacturing plant on this land; the plant will cost $13.2 million to build, and the site
requires $840,000 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? (Do not round intermediate calculations and enter your answer in dollars,
not millions of dollars, e.g., 1,234,567.)
Answer is complete but not entirely correct.
Cash flow amount
$
18,780,000 ×
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