Initial investment in fixed assets

Reference no: EM13123523

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 $6 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 $9.4 million. The company wants to build its new manufacturing plant on this land; the plant will cost $16.2 million to build, and the site requires $1,034,000 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?

a) $24,566,000

b) $22,168,640

c) $27,965,700

d) $25,600,000

e) $26,634,000

Reference no: EM13123523

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