Question

Kelly's corner bakery purchased a lot in oil city 6 years ago at a cost of $302,000. today, that lot has a market value of $340,000. at the time of the purchase, the company spent $15,000 to level the lot and another $20,000 to install storm drains. the company now wants to build a new facility on that site. the building cost is estimated at $1.51 million. what amount should be used as the initial cash flow for this project?.

Answer 1

The initial cash flow is the amount of money paid out or received at the start of a project or investment. Therefore the amount that should be used as the initial cash flow for the project is 302,000 + 15,000 + 20,000 and an estimated 1.51 million if the building is built.