Marshall\'s & Co. purchased a corner lot in Eglon City five years ago at a cost
ID: 2645739 • Letter: M
Question
Marshall's & Co. purchased a corner lot in Eglon City five years ago at a cost of $640,000. The lot was recently appraised at $670,000. At the time of the purchase, the company spent $30,000 to grade the lot and another $3,200 to build a small building on the lot to house a parking lot attendant who has overseen the use of the lot for daily commuter parking. The company now wants to build a new retail store on the site. The building cost is estimated at $1,110,000. What amount should be used as the initial cash flow for this building project?
Explanation / Answer
Calculation of the Initial Cash Flow of the Project:
Amount($) Building Cost 1,110,000 + Opportunity Cost of Land 670,000 Total Initial Cash Flow 1,780,000Related Questions
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