Mr. John Ratchett is planning to construct a manufacturing plant. To get production started, he will require land, infrastructure and machinery. He anticipates that production will commence in two years. In estimating future cash flows of the company, which of the following items would be relatively easy versus relatively difficult to obtain? Also suggest how each might be estimated with reasonable accuracy.
a. Cost of land for a 4000 square foot building.
b. Cost of construction (concrete structure).
c. Initial working capital.
d. Total capital investment cost.
e. First year's labor and material costs.
f. First year's sales revenues.