A firm is considering a capital project for which the, Ask an Expert

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A firm is considering a capital project for which the following information is available: An existing piece of equipment that would be disposed of to make room for new equipment has a historical cost of $370,000. It has a salvage value of $10.000 and has been depreciated on a straight-line basis for 16 of the estimated 18 years of its useful life. The new equipment has a cost of $500,000 and the firm expects it will have to devote $20,000 in cash and $24,000 in accounts receivable to the new project. The firm's effective tax rate is 40%. The required net initial invested in the new project is

$544,000

$534,000

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91612782

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