$($Estimated time allowance: $5$ minutes$)$ EasyT Inc. wants to introduce a new faster jet into

the market. This project requires the following investment: Manufacturing equipment in the

amount of $$5\mathrm{.}1$ million and an initial $$3\mathrm{.}3$ million investment in net operating working

capital. Lily spent and expensed $$40$ million last year on research and product development.

Rather than build a new manufacturing facility, Lily plans to install the equipment in a

building it owns but it is not now using. The building could be sold for $$27$ million after taxes

and commissions. The company also plans to use a vacant lot adjacent to the building for

parking for the project. The site requires $$1\mathrm{.}5$ million worth of improvements before it is

suitable. The company had bought the piece of land $3$ years ago for $$12$ million and has been

empty ever since. Today, the value of the land net of taxes is estimated at $$28\mathrm{.}9$ million. The

tax rate is $30\%.$

What is the initial investment outlay $($IO$)$ for the NPV evaluation of the project? Since the IO

is a cash outlay, enter the answer using the negative sign $(-)$ in front of the first digit of your

answer.

Enter your answer in millions. For example, if you obtained $-$$$3,450,000$ then enter $-3\mathrm{.}45$; for

$-4,000,000$ then enter $-4\mathrm{.}00$

Your Answer:

Answer