Problem $9-1$ Relevant Cash Flows $[$LO $1]$

Parker & Stone, Incorporated, is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company

bought some land six years ago for $$7\mathrm{.}5$ million in anticipation of using it as a warehouse and distribution site, but the company has

since decided to rent facilities elsewhere. If the land were sold today, the company would net $$10\mathrm{.}3$ million. The company now wants to

build its new manufacturing plant on this land; the plant will cost $$21\mathrm{.}5$ million to build, and the site requires $$900,000$ worth of grading

before it is suitable for construction. What is the proper cash flow amount to use as the initial investment in fixed assets when

evaluating this project?

Note: Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole number,

e$.$g$.,1,234,567.$

Note: this question requires you to think about whether prior costs $($or value$)$ or current costs $($or value$)$ matter when evaluating a

project. Hint, what matters is current costs $($or value$).$

Answer is complete but not entirely correct. $32,700,000$ is not the Answer