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Joes PC repair purchased a lot in Lake City two years ago at a cost of $86,000. Today, that lot has a market value of

Joes PC repair purchased a lot in Lake City two years ago at a cost of $86,000. Today, that lot has a market value of $115,000. At the time of the purchase, Joe Spence, the firms owner, spent $19,000 for lot improvements and utility install charges. Joe now wants to build a facility on that site. The building cost is estimated at $260,000. What amount should be used as the initial cash flow for this project?

The costs that should be considered are called

Question 2 options:

a)

Sunk costs

b)

Net working capital

c)

Opportunity costs

d)

Erosion costs

3)

To calculate the initial project cash flow, this problem requires

Question 3 options:

a)

Using the purchase price of the lot plus the other costs

b)

Using today's market value for the land plus the other costs

c)

Using today's market value for the land

d)

Using only the purchase price of the lot.

4.

The initial cash flow(CF0) is __________________?

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