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Alex
3 years ago
12

Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company

bought some land six years ago for $4.5 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 $4.8 million. The company wants to build its new manufacturing plant on this land; the plant will cost $12 million to build, and the site requires $720,000 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?
Business
2 answers:
dezoksy [38]3 years ago
6 0

Answer:

The proper cash flow investment on fixed assets amount will be $17.22 Million

Explanation:

Firstly we take note that the land has already been purchased so an investment of $4.5 million has been already invested in the project therefore this is the amount that will be used as purchasing of land as it actually involved the spending of $4.5 million in cash to purchase this long term asset that is why we use this amount rather than $4.8 million as this is the fair market value of the land but not the initial amount that costed the company to acquire the land. Further we are given the cost of the plant of $12 million and a further $720000 which will be used to refurbish the land in order to grade the land for building the plant.

The cash flow for initial investment in fixed assets = $4.5 million + $12 million + $0.72 million($720000) = $17.22 Million

we sum all these amounts as they are part of the initial investment where the company builds the plant.

djverab [1.8K]3 years ago
5 0

Answer:

Cash flow amount = $17.52 million.

Explanation:

Cash flow amount = $4.8m of land + $12 m of building + $720k of grading = $17.52 million.

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Answer:

marginal resource cost is equal to their MRP

Explanation:

A business's profit will maximize when its marginal resource cost equals its marginal revenue product.

Marginal revenue product calculated by multiplying the marginal physical product (MPP) times the marginal revenue (MR), e.g. an additional worker can produce 10 units and each unit costs $10, MRP = 10 x $10 = $100

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3 years ago
Moji Mont Company has a debt-equity ratio of .25. The required return on the company’s unlevered equity is 15 percent, and the p
Gala2k [10]

Answer:

The company's worth is $24,420,000 if it is financed entirely by equity

Explanation:

The value of the company if financed entirely by equity is the perpetual cash flows that can be derived  from the company using the required rate of return  on the company's un-levered equity at 15%.

Sales                                                  $18,500,000

Variable costs(70%*$18,500,000)   ($12,950,000)

EBIT                                                    $5,550,000

tax at 34%(34%*$5,550,000)            ($1,887,000)

Net income                                          $3,663,000.

Company's worth= $3,663,000/15%

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4 0
3 years ago
Robo Hot Inc., is a company that markets electric heaters to hospitals. Mr. Heatmizer, it's CEO, would ike to reduce its invento
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Answer:

Expected number of orders=31.6 orders per year

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<em>The expected number of orders would be the Annual demand divided by the economic order quantity(EOQ).</em>

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It is calculated as follows:

EOQ = (2× Co D)/Ch)^(1/2)

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The principal currency influencing retail prices (usually the currency in which prices are denominated and settled).

The money of the nation whose laws and competition have the biggest impact on retail pricing.

The principal currency affecting labor expenses and other costs of goods sold (usually the currency in which prices are denominated and settled).

The currency in which an entity keeps its operating receipts and the currency in which debt and equity instruments are issued are less important deciding factors.

Know more about functional currency here:

brainly.com/question/28013130

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