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2. Incremental costs Initial and terminal cash flow Aa Aa Consider the case of Acme Manufacturing: Acme Manufacturing is considering a project that requires an

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2. Incremental costs Initial and terminal cash flow Aa Aa Consider the case of Acme Manufacturing: Acme Manufacturing is considering a project that requires an investment in new equipment of $3,800,000, with an additional $190,000 in shipping and installation costs. Acme estimates that its accounts receivable and inventories need to increase by $760,000 to support the new project, some of which is financed by a $304,000 increase in spontaneous liabilities (accounts payable and accruals) The total cost of Acme's new equipment is and consists of the price of the new equipment plus the In contrast, Acme's initial net investment outlay is $4,142,000 $4,256,000 $4,446,000

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