Question
Given the following information, what is the required cash outflow associated with the acquisition of a new machine; that is, in a project analysis, what
Given the following information, what is the required cash outflow associated with the acquisition of a new machine; that is, in a project analysis, what is the cash outflow at
t = 0?
| Purchase price of new machine | $8,000 |
| Installation charge | 2,000 |
| Market value of old machine | 2,000 |
| Book value of old machine | 1,000 |
| Inventory decrease if new machine is installed | 1,000 |
| Accounts payable increase if new machine is installed | 500 |
| Tax rate | 35% |
| Cost of capital | 15% |
a. -$ 8,980.
b. -$ 6,460.
c. -$ 5,200.
d. -$ 6,850.
e. -$12,020
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Essentials Of Real Estate Finance
Authors: David Sirota, Doris Barrell
14th Edition
1475428391, 9781475428391
