K Review Question 5 of 14 Score This Question SaveExit Submi

K Review Question 5 (of 14) Score This Question Save&Exit; Submit value 10.00 points Problem 10-1 Relevant Cash Flows [LO1] Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The com warehouse and distribution site, but the company has since decided to rent the pany bought some land six years ago for $4.6 million in anticipation of using it as a se facilities from a competitor instead. If the land were sold today, the company would net $4.9 million. The company wants to $730,000 worth of grading before it is suitable for construction. What is the proper cash flow amount to use manufacturing plant on this land; the plant will cost $12.1 million to build, and the site requires as the initial investment in fixed assets when evaluating this projec? (Enter your answer in dollars, not millions of dollars, e.g. 1,234,567.) Cash flow amount Hints References eBook & Resources Hint#1 Check my work

Solution

INITIAL INVESTMENT: Resale value of the land (net) foregone-Opportunity cost 4900000 Cost of new plant 12100000 Cost of grading 730000 Cash flow amount 17730000