Marshall\'s & Co. purchased a corner lot in Eglon City five years ago at a cost

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 $900,000. At the time of the purchase, the company spent $50,000 to grade the lot and another $5,000 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 $1,040,000. What amount should be used as the initial cash flow for this building project?

Explanation / Answer

Hi, Initial cash flow would be: 900000 + 1040000 = 1940000 Thanks, Aman

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