You have just completed a $20,000 feasibility study for a new coffee shop in some retail space you own. You bought the space two years ago for $98,000, and if you sold it today, you would net $110,000 after taxes. Outfitting the space for a coffee shop would require a capital expenditure of $33,000 plus an initial investment of $5,000 in inventory. What is the correct initial cash flow for your analysis of the coffee shop opportunity? Identify the relevant incremental cash flows below: (Select all the choices that apply.) O A. Price you paid for the space two years ago. LB. Initial investment in inventory. Yc. Amount you would net after taxes should you sell the space today. O D. Feasibility study for the new coffee shop. E. Capital expenditure to outfit the space. Calculate the initial cash flow below: (Select from the drop-down menus and round to the nearest dollar.) 1 Opportunity Cost $ 2 Capital Expenditure (outfit of space) . $ 3 Change in Net Working Capital ........ $ 4 Free Cash Flow $
You have just completed a $20,000 feasibility study for a new coffee shop in some retail space you own. You bought the space two years ago for $98,000, and if you sold it today, you would net $110,000 after taxes. Outfitting the space for a coffee shop would require a capital expenditure of $33,000 plus an initial investment of $5,000 in inventory. What is the correct initial cash flow for your analysis of the coffee shop opportunity? Identify the relevant incremental cash flows below: (Select all the choices that apply.) O A. Price you paid for the space two years ago. LB. Initial investment in inventory. Yc. Amount you would net after taxes should you sell the space today. O D. Feasibility study for the new coffee shop. E. Capital expenditure to outfit the space. Calculate the initial cash flow below: (Select from the drop-down menus and round to the nearest dollar.) 1 Opportunity Cost $ 2 Capital Expenditure (outfit of space) . $ 3 Change in Net Working Capital ........ $ 4 Free Cash Flow $
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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Question
match those choices with the cash flow

Transcribed Image Text:The image displays a dropdown menu containing several financial terms related to business planning or evaluation. The items listed in the dropdown are:
1. **Capital Expenditure (outfit of space)**
2. **Capital Expenditure (price of space)**
3. **Change in Net Working Capital**
4. **Feasibility Study Cost**
5. **Opportunity Cost** (This item is highlighted, indicating selection or emphasis)
These items likely refer to key cost or investment considerations in financial planning or analysis contexts. There are no graphs or diagrams present in the image.
![You have just completed a $20,000 feasibility study for a new coffee shop in some retail space you own. You bought the space two years ago for $98,000, and if you sold it today, you would net $110,000 after taxes. Outfitting the space for a coffee shop would require a capital expenditure of $33,000 plus an initial investment of $5,000 in inventory. What is the correct initial cash flow for your analysis of the coffee shop opportunity?
Identify the relevant incremental cash flows below: (Select all the choices that apply.)
- [ ] A. Price you paid for the space two years ago.
- [x] B. Initial investment in inventory.
- [x] C. Amount you would net after taxes should you sell the space today.
- [ ] D. Feasibility study for the new coffee shop.
- [x] E. Capital expenditure to outfit the space.
Calculate the initial cash flow below: (Select from the drop-down menus and round to the nearest dollar.)
1. Opportunity Cost: $ ______
2. Capital Expenditure (outfit of space): $ ______
3. Change in Net Working Capital: $ ______
4. Free Cash Flow: $ ______](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1c9732cb-ae4a-4d93-bf70-995c53334240%2F69c0b3d0-29fb-4119-9685-5574d09eadc0%2Fw02ykm5_processed.png&w=3840&q=75)
Transcribed Image Text:You have just completed a $20,000 feasibility study for a new coffee shop in some retail space you own. You bought the space two years ago for $98,000, and if you sold it today, you would net $110,000 after taxes. Outfitting the space for a coffee shop would require a capital expenditure of $33,000 plus an initial investment of $5,000 in inventory. What is the correct initial cash flow for your analysis of the coffee shop opportunity?
Identify the relevant incremental cash flows below: (Select all the choices that apply.)
- [ ] A. Price you paid for the space two years ago.
- [x] B. Initial investment in inventory.
- [x] C. Amount you would net after taxes should you sell the space today.
- [ ] D. Feasibility study for the new coffee shop.
- [x] E. Capital expenditure to outfit the space.
Calculate the initial cash flow below: (Select from the drop-down menus and round to the nearest dollar.)
1. Opportunity Cost: $ ______
2. Capital Expenditure (outfit of space): $ ______
3. Change in Net Working Capital: $ ______
4. Free Cash Flow: $ ______
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