Question
Alpha Manufacturing is contemplating the replacement of existing machinery to increase their annual output capacity. The new machinery and equipment are estimated to cost $525635
Alpha Manufacturing is contemplating the replacement of existing machinery to increase their annual output capacity. The new machinery and equipment are estimated to cost $525635 in total, with an additional $106693 required for shipping and installation. The project would necessitate the firm to increase their net working capital by $68908 initially, as well as undertake additional staff training for $13694. The existing machinery has been fully depreciated, having originally cost the firm $271902, and could be sold for $70546. The firms marginal tax rate is 30 percent and cost of capital is 8 percent.
What is the net investment for this project?
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