Question

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?

Answer 1

Answer:

$300,000

Explanation:

Cash flow from investment are any cash that the company receives or pays for a long term investment for example buying a building or selling machinery etc. In this case the company bought building for a million dollars and land for half a million dollars. But the total cash investing outflow will be 300,000 because that is the cash that they initially paid or flowed out from their company, where as the rest was on mortgage. SO the total amount ofcash going out of the company for investing activities is $300,000.