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lion oil company purchased a lot in pacific beach 6 years ago at a cost of $500,000. today, that lot has a market value of $850,000. at the time of the purchase, the company spent $26,000 to level the lot and another $26,000 to install storm drains. the company now wants to build a new facility on that site. the building cost is estimated at $1.55 million. what amount should be used as the initial cash flow for this project?

Answer

The project's initial cash flow will commence at $2,400,000, which is calculated by combining the market value of the lot and the estimated construction costs. The initial cash flow signifies the total amount of funds accessible during the planning phase of any project or enterprise. So, what exactly is initial cash flow? It is the amount of money available when a project is still in the planning phase, calculated using the formula FC+WC+(S-B)*T. Here, WC represents working capital, FC is fixed capital, S is salvage value, B is book value, and T stands for the tax rate. Any loans or investments made in the project will also be included in the initial cash flow's value, and it will be reflected as a negative number. Therefore, the project's initial cash flow is determined by adding the market value of the plot and construction costs, which amounts to $2,400,000, derived from $850,000 and $1.55,000, respectively. For more information on initial cash flow, refer to brainly.com/question/24179665 #SPJ4.