Problem 11-1 Investment Outlay Talbot Industries is considering launching a new product. The new manufacturing equipment will
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Problem 11-1 Investment Outlay
Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $19 million, and production and sales will require an initial $1 million investment in net operating working capital. The company's tax rate is 35%.
- What is the initial investment outlay? Write out your answer completely. For example, 2 million should be entered as 2,000,000.
- The company spent and expensed $150,000 on research related to the project last year. Would this change your answer?
- Rather than build a new manufacturing facility, the company plans to install the equipment in a building it owns but is not now using. The building could be sold for $1.5 million after taxes and real estate commissions. How would this affect your answer? Will the project's cost increase, decrease, or not change?
Related Book For
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr
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