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.
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.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter12: Capital Budgeting: Decision Criteria
Section: Chapter Questions
Problem 22P: The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500,...
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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.
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