Use as initial investment in fixed assets

Assignment Help Financial Management
Reference no: EM131461046

Kenny, Inc., is looking at setting up a new manufacturing plant in South Park. The company bought some land six years ago for $8.6 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 $11.4 million if it were sold today. The company now wants to build its new manufacturing plant on this land; the plant will cost $22.6 million to build, and the site requires $1,010,000 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? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Reference no: EM131461046

Questions Cloud

Describe offer online banking facilities are prone to fraud : New research shows that many banks are unwittingly training their online customers to take risks with their passwords and other sensitive account information.
How your past experiences with a diverse population : This activity is to help you to understand how your past experiences with a diverse population of individuals can influence your teaching practices.
What is the break-even point in units for donna karan : What is the break-even point in units for Donna Karan?
Things that differentiated the various revolutions : Name five things that differentiated the various revolutions discussed in this section.
Use as initial investment in fixed assets : What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project?
Qualities of the goddess does enheduanna praise : 1. What powers and qualities of the goddess does Enheduanna praise?
How much would you have to pay out of pocket : How much would you have to pay out of pocket
Describe the organizations vision for the futures : Discuss any community partnerships that they have. Suggest additional partnerships that you feel they should have.Describe the organization's vision for futures
Define the social security benefits : The Social Security Administration is not expected to provide any increases in Social Security benefits for the second straight year.

Reviews

Write a Review

Financial Management Questions & Answers

  Different silicon wafer milling machines

You are evaluating two different silicon wafer milling machines. The Techron I costs $255,000, has a three-year life, and has pretax operating costs of $68,000 per year. For both milling machines, use straight-line depreciation to zero over the proje..

  What is the operating cash flow for the project in year

You are evaluating a project for The Tiff-any golf club, guaranteed to correct that nasty slice. You estimate the sales price of The Tiff-any to be $430 per unit and sales volume to be 1,000 units in year 1; 1,500 units in year 2; and 1,325 units in ..

  The effect of this sale on ni and cash would be

At the end of 2012, Liam Corporation buys a new machine for $30K, the cost of which is depreciated over 5 years. The first year’s depreciation is taken in 2013. Liam sells the machine at the end of 2015 (after three years) for $13,000. Liam’s tax rat..

  Evaluate the required monthly mortgage payment

Evaluate the required monthly mortgage payment for Mr. Davidson and construct the 2014~2018 amortization table for Mr. Davidson.

  What is the future value of his investment cash flows

Chuck Brown will receive from his investment cash flows of $3,155, $3,500, and $3,840 at the end of years 1, 2 and 3 respectively. If he can earn 7.5 percent on any investment that he makes, what is the future value of his investment cash flows at th..

  Reduced by replacing common equity with preferred stock

If a firm is exposed to a high degree of business risk as a result of its high operating leverage, then it probably should offset this risk by using a larger-than-average amount of financial leverage. This follows because debt has a lower after-tax c..

  Expected to contain the highest amount of risk

Historically speaking, which security would be expected to contain the highest amount of risk? Which one of the following statements is more likely to be correct concerning the comment, "Stock A has a higher expected return than Stock B"?

  The profitability index measures the bang for your buck

Practitioners often use the profitability index to identify the optimal combination of projects when there is a fixed supply of resources. The profitability index is calculated as the NPV divided by the resources consumed by the project. The profitab..

  Evaluating project for tiff-any golf club

You are evaluating a project for The Tiff-any golf club, guaranteed to correct that nasty slice. You estimate the sales price of The Tiff-any to be $480 per unit and sales volume to be 1,200 units in year 1; 1,125 units in year 2; and 1,000 units in ..

  Under-over valued stock

Under/Over Valued Stock A manager believes his firm will earn a 11.35 percent return next year. His firm has a beta of 1.39, the expected return on the market is 8.9 percent, and the risk-free rate is 3.9 percent. Compute the return the firm should e..

  Growth rate in dividends is expected to be a constant

Universal Laser, Inc. just paid a dividend of $2.65 on its stock. The growth rate in dividends is expected to be a constant 4% per year indefinitely.

  What is bond value for the zero-coupon bonds

The expected return on the market is 12%. Bacon Everything, INC! has a current stock price of $65. There are 15 million shares outstanding. The beta for the stock is 1.6. Bacon Everything INC! has a plowback ratio of 40%. What is the cost of equity f..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd