Question 14

A fast food restaurant is considering installing a much larger grill. The grill will cost $50,000 and working capital would have to increase by $5,000 over the life of the project. The new grill will not increase sales but it should reduce operating costs by $15,000 over the next five years. The grill will be depreciated straight line over the five year period, and the company thinks it can sell the grill for $2,000 at the end of the project. The restaurant pays a 25% tax rate. What is the initial outlay for this project?

		-$40,000
		-$50,000
		-$55,000
		-$5,000