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Kenny, Inc., is looking at setting up a new manufacturing plant in South Park. The company bought some land six years ago for $7.
Kenny, Inc., is looking at setting up a new manufacturing plant in South Park. The company bought some land six years ago for $7.3 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 $10.1 million if it were sold today. The company now wants to build its new manufacturing plant on this land; the plant will cost $23.17 million to build, and the site requires $880,000 worth of grading before it is suitable for construction.
Required:What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project?
