(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
icon
Related questions
Question
(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.
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.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Future Value
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education