Kelly\'s Corner Bakery purchased a lot in Oil City five years ago at a cost of $
ID: 2783683 • Letter: K
Question
Kelly's Corner Bakery purchased a lot in Oil City five years ago at a cost of $600,000. Today, that lot has a market value of $840,000. At the time of the purchase, the company spent $49,000 to level the lot and another $3,000 to install storm drains. The company now wants to build a new facility on that site. The building cost is estimated at $1,070,000. What amount should be used as the initial cash flow for this project?
Select the correct choice:
$-1,070,000
$-1,959,000
$-1,670,000
$-1,910,000
$-1,719,000
Explanation / Answer
D. $-1,910,000
Amount that should be used as the initial cash flow for this project:
= -$840,000 - $1,070,000
= -$1,910,000
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