Malaga, Inc. plans to open a new manufacturing plant. Rather than purchase a plant for a...

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Malaga, Inc. plans to open a new manufacturing plant. Rather than purchase a plant for a total cost of $3,000,000, Malaga has chosen to lease a building for five years at a total cost of $250,000 per year. The lease payments are due at the end of each year. Malaga, also has plans to immediately purchase $500,000 of new equipment for the plant. The equipment will be depreciated to zero over 5 years. In addition, Malaga plans to immediately purchase $20,000 of new spare parts for the machinery in the plant. What initial cash flow (CFO) should Malaga use in its capital budgeting analysis if the project is expected to last 5 years? Malaga, Inc. plans to open a new manufacturing plant. Rather than purchase a plant for a total cost of $3,000,000, Malaga has chosen to lease a building for five years at a total cost of $250,000 per year. The lease payments are due at the end of each year. Malaga, also has plans to immediately purchase $500,000 of new equipment for the plant. The equipment will be depreciated to zero over 5 years. In addition, Malaga plans to immediately purchase $20,000 of new spare parts for the machinery in the plant. What initial cash flow (CFO) should Malaga use in its capital budgeting analysis if the project is expected to last 5 years?

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i Purchase cost of plant Amount 11 Lease of Building Amount iv Purchase o... View the full answer