B. Thelma Industries is considering an expansion. The necessary equipment would be purchased for P9 million, and the expansion would require an additional P3 million investment in net operating working capital. The tax rate is 40%.

a. What is the initial investment outlay? __________________. (Show your solution)

b. The company spent and expensed P50,000 on research related to the projected last year.

Would this change your answer? Explain.

c. The company plans to use a building that it owns to house the project. The building could be sold for P1 million after taxes and real estate commissions. How would that fact affect your answer?