Question

Sea Maters Inc. purchased a lot in Phenix City 6 years ago at a cost of $270,000. Today, that lot has a market value of $470,000. At the time of the purchase, the company spent $7,000 to improve the site for a future use. The company now wants to build a new facility on that site. The actual contruction cost is estimated at $1.3 million. What amount should be used as the initial cash outflow (Cf0) for this project? Put a positive dollar amount, and round it to a whole dollar, e.g., 123,456.

Answer 1

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projects (Autosaved) (Autosaved) (Autosaved) - Microsoft Excel (Product Activation Failed) Data Review View Add-Ins File Home Insert Page Layout Formulas - 2x % Cut 11 A = = V General A A = E Wrap Text Merge Merge & Center Center SF 4:0 .00 8. Insert Delete Format $ - % % Number Calibri E Copy Paste Format Painter B I Clipboard GN17 GK GL Conditional Format Formatting as Table Styles Cell Styles Σ AutoSum : A Fill Sort & 2 Clear Filter Editing Find & Select Alignment Cells U D Font for GM GN GO GP GQ GR GS GT GU GY GW GX PROPER CASH FLOW AMOUNT FOR THE PROJECT VALUE OF LAND TODAY ADD COST OF EQUIPMENT 470000 1300000 Nm + na 1770000 ANSWER (PROPER CASH FLOW] NOTE: IF COMPANY GO TO BUY LAND TODAY, IT WILL BE AVAILABLE AT 470000 AND NOT AT A PRICE WHICH PURCHASED LONG BACK SO CURRENT VALUE OF LAND WILL BE THE COST FOR THE PURPOSE OF THE PROJECT 11 12 13 14 15 16 17 18 19 WITHOUT GRADING, LAND WILL NOT BE USBALE FOR THE PROJECT BUT GRADING COST WAS A SUNK COST AS ALREADY INCURRED AND INCLUDED IN TODAY'S COST H invest, EAA MI-np-ir_ REPLACEMENT S HPR GMAM EAC MACRS NPV RELEVANT BETA LEVERED REPLACEMENT BOND STI I I RRnpvbeta RATION PBP ARR ferences: DF15 OPTION TO WAIT BO 130% Rea _ 0 + . .. B 9 . * . 40 ENG 20-11-2019