Ch 9 & 10 NPV. IRR, Capital Budgeting 4. value: 10.00 points Parker & Stone. Inc
ID: 2795575 • Letter: C
Question
Ch 9 & 10 NPV. IRR, Capital Budgeting 4. value: 10.00 points Parker & Stone. Inc., is looking tools The company bought some land sik years ago for $5.4 million in anticipation of using it as a at setting up a new manufacturing plant in South Park to produce garden and distribution site, but the company has since decided to rent these facilities from a would net $5.7 million. The company wants to competitor instead If the land were sold today, the company build its new manufacturing plant on this land the plant will cost $12.9 million to build, and the site requires $810.000 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.9 1234567) hifl Hints ReferenceseBook & Resources Hint#iExplanation / Answer
Calculation of cashflow amount for initial investment
1)If the land was sold today received market value* =5.7 million $
Instalation of plant & machinary =12.9 milions dollors
Additional cost to be incured for construction =0.81 million dolars
Initial investment =19.41 million dollars
Note*:since at present market value of land is 5.7 million dolllars