Determine the incremental cash flow


Problem: Darth Vader, Inc. is looking at setting up a new manufacturing plant in Death Star to produce TIE fighters. The company bought some land a decade ago for $40 billion. The land was appraised recently for $30 billion. Darth Vader wants to build the new plant on this land; the plant will cost $50 billion to build, and the site requires $3 billion worth of grading before it is suitable for construction. What should be the proper "incremental cash flow" amount to use as the initial investment (CF0)?

a.    $43 billion.

b.    $60 billion.

c.    $63 billion.

d.    $83 billion.

e.    $93 billion.

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Accounting Basics: Determine the incremental cash flow
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