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You are thinking about a project to expand your business. In order to start the project, you have to invest $200,000 in new equipment and $50,000 in working capital. You have to spend $15,000 for installation and $5,000 for shipping of the equipment. A few months ago, you spent $7,000 in consulting. The marginal tax rate of your company is 34%. What is the initial outlay of this project?

Respuesta :

Answer:

$270,000

Explanation:

The computation of the initial outlay of the project is shown below:

The initial outlay of this project = Purchase Price of the Asset + Installation Costs + Shipping cost + Investment in Working Capital

= $200,000 + $15,000 + $5,000 + $50,000

= $270,000

We simply added the purchased price, installation charges, shipping cost and the investment in working capital so that the initial outlay could come

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