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General Food is considering building a new plant in Denver, Colorado

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Question;General Food is considering building a new plant in Denver, Colorado. The company currently owns some land in Denver, which was purchased 3 years ago for $1.5 million but the current market value is estimated to be $1 million. The site analysis performed by a consulting firm (at a cost of $50,000 to General Food) shows that the land is suitable for the plant. The plant will cost $5.5 million to build. What is the initial investment in fixed assets assuming the marginal tax rate for General Food is 35%?

 

Paper#49374 | Written in 18-Jul-2015

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