Question
Question 4
A company bought a $1,000,000 building and $500,000 of land with a $300,000 cash down payment and used a new mortgage to pay the balance. What is the investing cash flow in this transaction?
($1,200,000)
($1,000,000)
($300,000)
($1,500,000)
($1,800,000)
1 point
5.
Question 5
Which of the foll
A company bought a $1,000,000 building and $500,000 of land with a $300,000 cash down payment and used a new mortgage to pay the balance. What is the investing cash flow in this transaction?
($1,200,000)
($1,000,000)
($300,000)
($1,500,000)
($1,800,000)
1 point
5.
Question 5
Which of the foll
Answers
GPT-4o mini
To determine the investing cash flow in the transaction where a company bought a building and land, we need to consider the total cash outflow for the purchase of these assets.
The total cost of the acquisition includes:
1. Building: $1,000,000
2. Land: $500,000
3. Total purchase price: $1,000,000 + $500,000 = $1,500,000
The cash outflow consists of the cash down payment made for the purchase:
- Cash down payment: $300,000
However, since the mortgage is used to finance the remainder of the purchase, the cash flow from the mortgage is not included in the investing cash flow.
Therefore, the investing cash flow for this transaction is simply the cash outflow for the down payment:
**Investing Cash Flow = -$300,000**
Since the question only provides options, the only answer that signifies a cash outflow associated with the purchase would be:
**($300,000)**
The total cost of the acquisition includes:
1. Building: $1,000,000
2. Land: $500,000
3. Total purchase price: $1,000,000 + $500,000 = $1,500,000
The cash outflow consists of the cash down payment made for the purchase:
- Cash down payment: $300,000
However, since the mortgage is used to finance the remainder of the purchase, the cash flow from the mortgage is not included in the investing cash flow.
Therefore, the investing cash flow for this transaction is simply the cash outflow for the down payment:
**Investing Cash Flow = -$300,000**
Since the question only provides options, the only answer that signifies a cash outflow associated with the purchase would be:
**($300,000)**