Parker & Stone, Incorporated, 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 $8.4 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent facilities elsewhere. If the land were sold today, the company would net $11.2 million. The company now wants to build its new manufacturing plant on this land; the plant will cost $22.4 million to build, and the site requires $990,000 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?Note: Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole number, e.g., 1,234,567.Hint: the answer in the pic is incorrect Parker & Stone, Incorporated, 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 $8.4 million in anticipation of using it as a warehouse and distributionsite, but the company has since decided to rent facilities elsewhere. If the land were sold today, the company would net$11.2 million. The company now wants to build its new manufacturing plant on this land; the plant will cost $22.4 millionto build, and the site requires $990,000 worth of grading before it is suitable for construction. What is the proper cashflow amount to use as the initial investment in fixed assets when evaluating this project?Note: Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearestwhole number, e.g., 1,234,567.Cash flow$34,590,000

Initial investment cash flow refers to the amount of cash that is being invested in the project…

Answered: Parker & Stone, Incorporated, is…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 14P

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Parker & Stone, Incorporated, 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 $8.4 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent facilities elsewhere. If the land were sold today, the company would net $11.2 million. The company now wants to build its new manufacturing plant on this land; the plant will cost $22.4 million to build, and the site requires $990,000 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?

Note: Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole number, e.g., 1,234,567.

Hint: the answer in the pic is incorrect

Parker & Stone, Incorporated, 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 $8.4 million in anticipation of using it as a warehouse and distribution
site, but the company has since decided to rent facilities elsewhere. If the land were sold today, the company would net
$11.2 million. The company now wants to build its new manufacturing plant on this land; the plant will cost $22.4 million
to build, and the site requires $990,000 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?
Note: Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest
whole number, e.g., 1,234,567.
Cash flow
$
34,590,000

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