MeowLove, Inc. has just completed a $19,000 feasibility study for a new cat caf in...
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MeowLove, Inc. has just completed a $19,000 feasibility study for a new cat caf in its own retail space. It bought the space four years ago for $98,000, and if MeowLove sold it today, the after-tax gain would be $150,000. Outfitting the space for a caf would require a capital expenditure of $32,000 plus an initial investment of $4,950 in inventory. Which of the following should be included in the relevant incremental cash flows in year 0 if MeowLove wants to operate a new cat caf?
I. Feasibility study for the new cat caf
II. Price paid for the space four years ago.
III. After-tax gain if MeowLove sold the space today.
IV. Capital expenditure to outfit the space.
V. Initial investment in inventory.
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