Proper cash flow amount to use as the initial investment

Assignment Help Financial Management

Reference no: EM13730397

Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $5.3 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 $5.6 million. The company wants to build its new manufacturing plant on this land; the plant will cost $12.8 million to build, and the site requires $800,000 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?

Reference no: EM13730397

Questions Cloud

Computer-based order entry system : Your firm is contemplating the purchase of a new $620,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $68,000 at the end of that time.

Expansion project-requires initial fixed asset investment : Keiper, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.85 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be wort..

Requires an initial fixed asset investment : Keiper, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.76 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be wort..

Mount to use as annual sales figure when evaluating project : Winnebagel Corp. currently sells 35,000 motor homes per year at $73,000 each, and 14,500 luxury motor coaches per year at $110,000 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 30,000 of the..

Proper cash flow amount to use as the initial investment : Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $5.3 million in anticipation of using it as a warehouse and distribution site, but the comp..

How quality of care may be increased and achieved : We respect and understand that quality of care is a worthy goal and absolute requirement for healthcare providing organizations. Give three examples of how quality of care may be increased and achieved.

Highly efficient market or a relatively inefficient market : As an inexperienced investor, would you prefer to invest in a highly efficient market or a relatively inefficient market? Explain.

Behavioural finance agree with efficient market advocates : Some advocates of behavioural finance agree with efficient market advocates that indexing is the optimal investment strategy for most investors. But their reasons for this conclusion differ greatly. Compare and contrast the rationale for indexing acc..

Difference between active-passive bond portfolio management : What is the difference between active and passive bond portfolio management? Give some examples of each.(Investments)

User Account

All Pages