Question
Jefferson Industries is considering an expansion. The necessary equipment would be purchased for $10 million and will be fully depreciated at the time of purchase.
Jefferson Industries is considering an expansion. The necessary equipment would be purchased for $10 million and will be fully depreciated at the time of purchase. The expansion would also require an additional $4 million investment in working capital. The tax rate is 30 percent. Last year, the company spent and expensed $400,000 on research related to the project.The company plans to house the project in an unused building it owns. If the building were sold, it would net $1.6 million after taxes and real estate commissions. What is the initial investment outlay for this project after bonus depreciation is considered?
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