Question
Zinc, Inc. is considering the acquisition of a new machine. The machine can be purchased for $3,750,000. It will cost $90,000 to install the machine
Zinc, Inc. is considering the acquisition of a new machine. The machine can be purchased for $3,750,000. It will cost $90,000 to install the machine in Zincs factory. There will be an immediate investment of $10,000 in inventory and $15,000 in accounts receivable if Zinc goes ahead with this purchase. Further, operating expenses will increase by $100,000 (for new employee costs and utilities expenses) if the company purchases this machine. What is the change in capital expenditures for this project in year 0?
a) $135,000
b) $3,840,000
c) $3,865,000
d) $3,965,000
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