Question
A firm is planning to purchase a new machine to replace old. The cost of machine is $400,000, shipping is $50,000 and installation is $30,000.
A firm is planning to purchase a new machine to replace old. The cost of machine is $400,000, shipping is $50,000 and installation is $30,000. Also the company has to train employees in order to operate the machine which cost the firm another $100,000. The company spent $50,000 for the marketing and another $20,000 for consulting previously. The company can sell the old machine for $100,000 while it has the book value of $0. The new project requires the company to invest in working capital that is $70,000. If the companys marginal tax rate is 40%, what is the initial outlay of replacing the machine? Round to the nearest penny. Do not include a dollar sign in your answer. Type the absolute value of the answer. (i.e. If your answer is -$20,000 since it is cost to replace, type 20000 as your answer.)
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