Kelly's corner bakery purchased a lot in oil city 6 years ago at a cost of $302,000. today, that lot has a market value of $340,000. at the time of the purchase, the company spent $15,000 to level the lot and another $20,000 to install storm drains. the company now wants to build a new facility on that site. the building cost is estimated at $1.51 million. what amount should be used as the initial cash flow for this project?

initial cash flow = -$1,850,000

Explanation:

given data

lot in Oil City cost = $302,000

market value = $340,000

level the lot = $15,000

install storm drains = $20,000

building cost = $1.51 million

solution

we find here Amount that is use as initial cash flow for that project is

initial cash flow = Market value of lot - Cost of building    1

put her value we get

initial cash flow =  -$340,000 - $1,510,000

initial cash flow = -$1,850,000

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