Pomerol & Sons currently produces patio umbrellas and is considering expanding its operations to include tents for cars and travel trailers. The company owns land beside its current manufacturing facility that could be used for the expansion. The company bought this land 5 years ago at a cost of $319,844. At the time of purchase, the company paid $33,000 to level out the land so it would be suitable for future use.

Today, the land is valued at $295,000. The company has some unused equipment that it owns currently valued at $33,099. This equipment could be used for producing awnings if $12,000 is spent for equipment modifications. Other equipment costing $497,127 will also be required.

What is the amount of the initial cash flow for this expansion project?

Cambridge EV Automobiles is analyzing a project that requires $265,000 of fixed assets. When the project ends, those assets are expected to have an after-tax salvage value of $85,000. How is the $85,000 salvage value handled when computing the net present value of the project?

Group of answer choices

cash inflow prorated over the life of the project

reduction in the cash outflow at time zero

not included in the net present value

cash inflow in the final year of the project

cash inflow for the year following the final year of the project