Question
1. You are putting together a capital project for cat food, something new for your company. This is a major undertaking and you are focusing
1. You are putting together a capital project for cat food, something new for your company. This is a major undertaking and you are focusing on the initial period cash flow. Machinery will cost $5 million and there will be sales tax of 5% on the machine. Delivery cost and installation fees will be $30,000. You have also been told that there will be incremental inventory required of $150,000 to start. Additionally, a significant market research project that cost $725,000 has recently been completed indicating a market share potential for the cat food market of 3%, which is very encouraging. What should be your estimate for initial period cash flow?
a. $5,150,000
b. -$5,180,000
c. -$5,430,000
( (6,155,000)) - this is incorrect
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