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A company is planning to replace old equipment with new, more efficient equipment. The company spent $70,000 on a market study and consulting a few
A company is planning to replace old equipment with new, more efficient equipment. The company spent $70,000 on a market study and consulting a few months ago. It purchased the old equipment 15 years ago for $2,300,000. The old equipment is depreciated to $400,000 and has a market value of $500,000 today. The new equipment will cost $3,000,000. In order to make the equipment operable, the company must pay $100,000 for installation and $150,000 for necessary training. With the anticipated growth due to the equipment replacement, the company has to invest $60,000 in working capital. The marginal tax rate is 32%. What is the initial outlay of this project to replace old equipment
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