Q19

19. A company is considering setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $4 million in anticipation of using it as a warehouse and distribution site, but the company has later given up on the plan. The land can be sold today for $5.1 million. The company wants to build on this land its new manufacturing plant; which will cost $18.1 million to build, and the site requires $900,000 worth of grading before it is suitable for construction. What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project? Explain. (Ignore