What is proper cash flow amount to use as initial investment

Assignment Help Financial Management

Reference no: EM13925229

Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land 10 years ago for $6 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 $9.2 million. The company wants to build its new manufacturing plant on this land; the plant will cost $12.2 million to build, and the site requires $1,288,000 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?

Reference no: EM13925229

Questions Cloud

What is the projects equivalent annual cost or EAC : A 5-year project has an initial fixed asset investment of $19,740, an initial NWC investment of $1,880, and an annual OCF of -$30,080. The fixed asset is fully depreciated over the life of the project and has no salvage value. Required: If the requir..

Requires an initial fixed asset investment : Summer Tyme, Inc., is considering a new 4-year expansion project that requires an initial fixed asset investment of $1.458 million. The fixed asset will be depreciated straight-line to zero over its 4-year tax life, after which time it will be worthl..

Comparing two different capital structures : Sanborn Corp. is comparing two different capital structures. Plan I would result in 9,000 shares of stock and $80,000 in debt. Plan II would result in 7,500 shares of stock and $120,000 in debt. The interest rate on the debt is 8 percent.

Income before irregular items : Utech Company has income before irregular items of $306,700 for the year ended December 31, 2014.

What is proper cash flow amount to use as initial investment : Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land 10 years ago for $6 million in anticipation of using it as a warehouse and distribution site, but the company..

Farmer and you breed a black chicken : You are a farmer and you breed a black chicken with a white chicken and all of the F1 generation are grey. What type of inheritance is this? What will be the phenotypic ratio of the F2 generation?

Considering two mutually exclusive investments : The Smith Pie Company is considering two mutually exclusive investments that would increase its capacity to make strawberry tarts. The firm uses a 12 percent cost of capital to evaluate potential investments. Assume that the cost of replacing A will ..

Make a financial analysis : Other date is listed below. Make a financial analysis and decide if a replacement is worth it. Lifespan of electric system=10 years and salvage S=0; Lifespan of the absorption system is 20 years and S=0(even after 10years)

Explain the different types of pathogen recognition : Explain the different types of pathogen Recognition Receptor types and their localization in the body.

User Account

All Pages