A.

Swenson Foods has sales for the year of $311,000 costs of $220,300, depreciation of $42,500, interest paid of $5,900, and a tax rate of 35 percent. What is the amount of the depreciation tax shield?

$20,865

$14,875

$17,145

$14,805

B.

Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land 7 years ago for $5 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent these facilities from a competitor instead. If the land were sold today, the company would net $9.4 million. The company wants to build its new manufacturing plant on this land; the plant will cost $15.2 million to build, and the site requires $846,000 worth of grading before it is suitable for construction.

Required :

What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project?

rev: 09_18_2012

$26,718,300

$23,754,000

$24,600,000

$20,028,160

$25,446,000