1A. Kelly\'s Corner Bakery purchased a lot in Columbus City five years ago at a

Question

1A. Kelly's Corner Bakery purchased a lot in Columbus City five years ago at a cost of $740,000. Today, that lot has a market value of $870,000. At the time of the purchase, the company spent $55,000 to level the lot and another $5,800 to install storm drains. The company now wants to build a new facility on that site. The building cost is estimated at $1,590,000. The amount should be used as the initial cash outflow for this project is $____. Put a positive dollar amount, and round it to a whole dollar, e.g., 123456.

1B. Jason purchased a stock for $48 one year ago. The stock is now worth $52 . During the year, the stock paid a dividend of $3.50. What is the percentage total holding period return to Jason from owning the stock? (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

Answer 1 B) Increase in Fair Value of Stock(Capital gain) = $ 52-48 = $ 4

Stock Dividend = $ 3.50

Total Return = $ 4+3.50 = 7.50

% Total Holding Period Return = 7.50/48* 100 = 15.625 or 15.62

Answer 1 A) The amount should be used as the initial Cash outflow for this project is:-

Purchase Cost of Lot = $ 740000

Additional Expenses on Lot = $ 55000 +5800 = 60800

Building Cost =1590000

Initial Cash Outflow = 2390800

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