You have just completed a $18,000 feasibility study for a new coffee shop in some retail space you own. You bought the space two years ago for $105,000, and if you sold it today, you would net$120,000 after taxes. Outfitting the space for a coffee shop would require a capital expenditure of $35,000 plus an initial investment of $4,800 in inventory. What is the correct initial cash flow for youranalysis of the coffee shop opportunity?Identify the relevant incremental cash flows below: (Select all the choices that apply.)A. Price you paid for the space two years ago.B. Capital expenditure to outfit the space.C. Feasibility study for the new coffee shop.D. Initial investment in inventory.E. Amount you would net after taxes should you sell the space today.Calculate the initial cash flow below: (Select from the drop-down menus and round to the nearest dollar.)1 Opportunity Cost$2 Capital Expenditure (outfit of space)$3 Change in Net Working Capital$$4 Free Cash Flow

Step 1: Relevant cash flows means the cash flows that must be considered while making the decision.…

Answered: You have just completed a $18,000…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 10PA: The Ham and Egg Restaurant is considering an investment in a new oven that has a cost of $60,000,...

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