Parker & Stone. Inc., is looking at setting up a new manufacturing plant in Sout
ID: 2645390 • Letter: P
Question
Parker & Stone. Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land 8 years ago for 54 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 $9.8 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 $1,274.000 worth of grading before it is suitable for construction. Required: What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project?Explanation / Answer
$23,274,000