Kenny, inc., is looking at setting up a new manufacturing plant in south park. the company bought some land six years ago for $7.6 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent facilities elsewhere. the land would net $10.4 million if it were sold today. the company now wants to build its new manufacturing plant on this land; the plant will cost $21.6 million to build, and the site requires $910,000 worth of grading before it is suitable for construction. required: what is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project?

$32,910,000

Explanation:

The computation of the proper cash flow is shown below:

= Sale Value of land + Cost of plant + grading expenses

= $10,400,000 + $21,600,000 +  $910,000

= $32,910,000

The sale value of land is the opportunity cost and the same is taken in the computation part

And, the $7.6 million represents the sunk cost which is not relevant. Hence, ignored it

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.