Question

Kelly's Corner Bakery purchased a lot in Oil City five years ago at a cost of $580,000. Today, that lot has a market value of $770,000. At the time of the purchase, the company spent $45,000 to level the lot and another $3,000 to install storm drains. The company now wants to build a new facility on that site. The building cost is estimated at $1,030,000. What amount should be used as the initial cash flow for this project? O $-1,800,000 $-1,845,000 O $-1,030,000 O $-1,655,000 O $-1,610,000

Answer 1

Your required answer is option A i.e $1,800,000

The cash spent in to start an investment or a project is called initial cash flow.

Initial cash flow=

Lot Market Value	$770,000
Add: Building Cost estimated	$1,030,000
Initial Cash Flow	$1,800,000

I hope this clear your doubt.

Feel free to comment if you still have any query or need something else. I'll help asap.

Do give Thumbs up if you find this helpful.