Determining the proper cash flow amount

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Q1) Relevant Cash Flows. Kenny, Inc., is looking at setting up the new making plant in South Park. Company purchased some land 6 years ago for $7 million in anticipation of using it as the warehouse and distribution site, but company has since decided to rent facilities elsewhere. Land would net $9.8 million if it were sold today. Company now wishes to make its new manufacturing plant on this land; plant will cost= $21 million to build, and site needs $850,000 worth of grading before it is appropriate for construction. Determine the proper cash flow amount to use as initial investment in fixed assets when estimating this project? Describe why?

Reference no: EM1310698

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