Question
Barrel &Co just purchased equipment for $15,000,000 which caused it to borrow $10,000,000 from a bank. The purchase was recommended by Hornets consultant last year,
Barrel &Co just purchased equipment for $15,000,000 which caused it to borrow $10,000,000 from a bank. The purchase was recommended by Hornets consultant last year, which was paid $450,000 for this advice. As a part of the same project, inventory will go up by $600,000, account receivable will increase by $800,000 and accounts payable will increase by $1,500,000. The equipment is being places in a factory that Barrel & Co had built 10 years ago and has a current market value of $4,000,000 after taxes and transaction costs. What is this project's impact on free cash right now (year 0)?
$11,100,000
($21,900,000)
($18,900,000)
($14,900,000)
($17,900,000)
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