Question
A 12-year project required an initial investment of $24 million in a plant and equipment that would be built on a plot of land owned
A 12-year project required an initial investment of $24 million in a plant and equipment that would be built on a plot of land owned by the company. The plot was purchased for $200,000 some years ago by the company for another project that never took off and the company neglected to sell the land. The current appraised market land is $350,000. A feasibility study that conformed the technical usefulness of the asset cost $120,000. The plant and equipment can be depreciated over its useful life of 15 years. At the end of 12 years, the asset can be sold for a salvage value of $6,000,000. The project would need an initial investment in NWC of $2 million. The tax rate is 20%. Calculate the initial cash outlay associated with the project.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started