oe's Diner purchased a lot in Oil City six years ago at a cost of $98,700....

oe's Diner purchased a lot in Oil City six years ago at a cost of $98,700. Today, that lot has a market value of $128,900. At the time of the purchase, the company spent $6,500 to level the lot and another $12,000 to install storm drains. The company now wants to build a new facility on the site at an estimated cost of $494,200. What amount should be used as the initial cash flow for this project?

Multiple Choice

−$611,400
−$623,100
−$641,600
−$592,900
−$582,400

Expert Solution

The initial cash flow will be the market value of the lot and the cost it takes to set up. Hence, it will be calculated as = 128900 + 494200 = 623100

Option B is correct.

jeff jeffy answered 2 years ago

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