posted by Serenity1 .
Calculate the project’s initial Time 0 cash flow, taking into account all side effects.?
This will be a five-year project. The company bought some land three years ago for $4.2 million in anticipation of using it as a toxic dump site for waste chemicals, but it built a piping system to safely discard the chemicals instead. The land was appraised last week for $1.0 million. In five years, the aftertax value of the land will be $3.4 million, but the company expects to keep the land for a future project. The company wants to build its new manufacturing plant on this land; the plant will cost 15 million to build.
The project requires 900,000 in initial net working capital investment to get operational.