Question 13 You have just completed a $24,000 feasibility study for a new coffee shop in some retail space you own. You bought the space two years ago for $101,000​, and if you sold it​ today, you...





Question 13


You have just completed a
$24,000

feasibility study for a new coffee shop in some retail space you own. You bought the space two years ago for
$101,000​,

and if you sold it​ today, you would net
$111,000

after taxes. Outfitting the space for a coffee shop would require a capital expenditure of
$28,000

plus an initial investment of
$4,900

in inventory. What is the correct initial cash flow for your analysis of the coffee shop​ opportunity?





Identify the relevant incremental cash flows​ below:  ​(Select all the choices that​ apply.)







A.


Price you paid for the space two years ago.






B.


Feasibility study for the new coffee shop.






C.


Initial investment in inventory.






D.


Amount you would net after taxes should you sell the space today.






E.


Capital expenditure to outfit the space.





Calculate the initial cash flow​ below: (Round to the nearest​ dollar.)































1



(1)



$






2



(2)



$






3



(3)



$






4


Free Cash Flow


$













(1)





Capital Expenditure (outfit of space)



Capital Expenditure (price of space)



Change in Net Working Capital





Feasibility Study Cost



Opportunity Cost







(2)





Capital Expenditure (outfit of space)



Capital Expenditure (price of space)



Change in Net Working Capital





Feasibility Study Cost



Opportunity Cost







(3)





Capital Expenditure (outfit of space)



Capital Expenditure (price of space)



Change in Net Working Capital





Feasibility Study Cost



Opportunity Cost







Jun 06, 2022
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