F H B D E F G 1 12-1 REQUIRED INVESTMENT 2 Truman Industries is considering an expansion. The necessary equipment 3 would be purchased for $10.20 million, and the expansion would require 4 an additional $3.70 million investment in net operating working capital. 5 The tax rate is 42.00%. 6 10.2 3.7 42% 7 a. Calculate the initial investment outlay. 8 9 + 10 11 12 13 b. The company will spend and expense $50,000 after-tax on research 14 related to the project over the next two years. Would this change your 15 answer? Explain. 16 17 18 19 c. The company plans to use a building that it owns to house the project. 20 The building is not suitable for anything else, so if the firm sold the 21 property, they would have to demolish the house for a cost of $1 million 22 after local taxes and real estate commissions. The property could then be 23 sold for $2.7 million after local taxes and real estate commissions. How 24 would that fact affect your answer? 25