Question

Sailcloth & More currently produces boat sails and is considering expanding its operations to include awnings for homes and travel trailers. The company owns land beside its current manufacturing facility that could be used for the expansion. The company bought this land 5 years ago at a cost of $319,000. At the time of purchase, the company paid $24,000 to level out the land so it would be suitable for future use. Today, the land is valued at $295,000. The company has some unused equipment that it currently owns valued at $38,000. This equipment could be used for producing awnings if $12,000 is spent for equipment modifications. Other equipment costing $490,000 will also be required. What is the amount of the initial cash flow for this expansion project?

Answer 1

$835,000

Step-by-step explanation:

the land is value = $295,000

Other equipment= $490,000

Equipment modification cost= $12,00

Equipment not used = $38,000

For us to be able to determine the initial cash flow of the expansion valuation and cost has to be put into consideration.

For we to get the cash flow expansion, we need to add this cost.

Amount of initial

cash flow expansion = $38,000+$12,000+$490,000+$295,000= $835,000

Answer 2

$835,000

Step-by-step explanation:

Sailcloth & More initial cash flow for this expansion could be determined by taking the following cost and valuations into consideration:

Equipment modification cost> $12,000

Other equipment costing> $490,000

Unused equipment> $38,000

Present Land value> $295,000

Therefore, if we sum up this cost figures we get the total initial cash flow for the expansion;

12,000+490,000+38,000+295,000=

835,000.