(Relevant cash flows) Kenny, Inc is looking at setting up a new manufacturing plant in South Park. The company bought some land six years ago for $9.5 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent facilitie elsewhere. The land would net $8.5 million if it were sold today. The company now wants to buld its new manufacturing plant on this land; the plant will cost $2.6 million to build, and the site requires $700,000 worth of grading before it is suitable for construction. When evaluating this project, the proper cash flow amount to use as the initial investment in fixed assets is $ million.
(Relevant cash flows) Kenny, Inc is looking at setting up a new manufacturing plant in South Park. The company bought some land six years ago for $9.5 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent facilitie elsewhere. The land would net $8.5 million if it were sold today. The company now wants to buld its new manufacturing plant on this land; the plant will cost $2.6 million to build, and the site requires $700,000 worth of grading before it is suitable for construction. When evaluating this project, the proper cash flow amount to use as the initial investment in fixed assets is $ million.
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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![(Relevant cash flows) Kenny, Inc is looking at setting up a new manufacturing plant in South Park. The company bought some land six
years ago for $9.5 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent facilities
elsewhere. The land would net $8.5 million if it were sold today. The company now wants to build its new manufacturing plant on this land;
the plant will cost $2.6 million to build, and the site requires $700,000 worth of grading before it is suitable for construction. When
evaluating this project, the proper cash flow amount to use as the initial investment in fixed assets is $
million.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fee21c905-fae3-4032-8520-307191b205a4%2F17520756-fee0-4597-aeb6-6780c61df709%2Fk339zg6_processed.jpeg&w=3840&q=75)
Transcribed Image Text:(Relevant cash flows) Kenny, Inc is looking at setting up a new manufacturing plant in South Park. The company bought some land six
years ago for $9.5 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent facilities
elsewhere. The land would net $8.5 million if it were sold today. The company now wants to build its new manufacturing plant on this land;
the plant will cost $2.6 million to build, and the site requires $700,000 worth of grading before it is suitable for construction. When
evaluating this project, the proper cash flow amount to use as the initial investment in fixed assets is $
million.
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