Question
You have just completed a $20,000 feasibility study for a new coffee shop in some retail space you own. You bought the space two years
You have just completed a
$20,000
feasibility study for a new coffee shop in some retail space you own. You bought the space two years ago for
$102,000,
and if you sold it today, you would net
$120,000
after taxes. Outfitting the space for a coffee shop would require a capital expenditure of
$32,000
plus an initial investment of
$5,200
in inventory. What is the correct initial cash flow for your analysis of the coffee shop opportunity?
Identify the relevant incremental cash flows below:(Select all the choices that apply.)
A.
Price you paid for the space two years ago.
B.
Capital expenditure to outfit the space.
C.
Amount you would net after taxes should you sell the space today.
D.
Initial investment in inventory.
E.
Feasibility study for the new coffee shop.
Calculate the initial cash flow below:(Select from the drop-down menus and round to the nearest dollar.)
1 |
| $ |
|
2 |
| $ |
|
3 |
| $ |
|
4 | Free Cash Flow | $ |
|
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