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1. White Oak Garden Inc. is looking atsetting up a new manufacturing plant in London. Ontario, to produce garden tools. The company bought some land
1. White Oak Garden Inc. is looking atsetting up a new manufacturing plant in London. Ontario, to produce garden tools. The company bought some land six years ago for $3.5 million in anticipation of using it as a warehouse and distribution siteI but the company has since decided to rent these tacl'rties from a competitor instead. If the land were sold today, the corrpanyr would net $3.9 million. The company wants to build its new manufacturing piant on this land; the plant wil cost $16.?2 million to build, and the site requires E worth of grading before it is suitable for construction. IWhat is the proper cash-ow amount to use as the initial irwestment in xed assets when evaluating this project? Why
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