Kelly's Corner Bakery purchased a lot in Oil City 6 years ago at a cost of $302,000.

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?    A.  -$1,470,000 B.  -$1,850,000 C.  -$1,875,000 D.  -$1,925,000 E.  -$1,945,000 CF0 = -$340,000 - $1,510,000 = -$1,850,000

48.

Sailcloth & More currently produces boat sails and is considering expanding its operations to include awnings for homes and travel trailers. The company owns land beside its current manufacturing facility that could be used for the expansion. The company bought this land 5 years ago at a cost of $319,000. At the time of purchase, the company paid $24,000 to level out the land so it would be suitable for future use. Today, the land is valued at $295,000. The company has some unused equipment that it currently owns valued at $38,000. This equipment could be used for producing awnings if $12,000 is spent for equipment modifications. Other equipment costing $490,000 will also be required. What is the amount of the initial cash flow for this expansion project?    A.  -$785,000 B.  -$823,000 C.  -$835,000 D.  -$859,000 E.  -$883,000 CF0 = -$295,000 - $38,000 - $12,000 - $490,000 = -$835,000