Give typing answer with explanation and conclusion Relevant cash flows) Kenny, Inc is looking at setting up a new manufacturing plant in South Park. The company bought some land six years ago for $3 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent facilities elsewhere. The land would net $4 million if it were sold today. The company now wants to build its new manufacturing plant on this land; the plant will cost $3 million to build, and the site requires $400,000 worth of grading before it is suitable for construction. When evaluating this project, the proper cash flow amount to use as the initial investment in fixed assets is $_________ million.
Give typing answer with explanation and conclusion Relevant cash flows) Kenny, Inc is looking at setting up a new manufacturing plant in South Park. The company bought some land six years ago for $3 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent facilities elsewhere. The land would net $4 million if it were sold today. The company now wants to build its new manufacturing plant on this land; the plant will cost $3 million to build, and the site requires $400,000 worth of grading before it is suitable for construction. When evaluating this project, the proper cash flow amount to use as the initial investment in fixed assets is $_________ million.
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 12P
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Give typing answer with explanation and conclusion
Relevant cash flows) Kenny, Inc is looking at setting up a new manufacturing plant in South Park. The company bought some land six years ago for $3 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent facilities elsewhere. The land would net $4 million if it were sold today. The company now wants to build its new manufacturing plant on this land; the plant will cost $3 million to build, and the site requires $400,000 worth of grading before it is suitable for construction. When evaluating this project, the proper cash flow amount to use as the initial investment in fixed assets is $_________ million.
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