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Investment Outlay

Talbot Industries is considering launching a new product. The new manufacturing equipment will cost 417 million, and production and sales will require an initial 45 million investments in net operating working capital. the company's tax rate is 40%.

a. What is he initial investment outlay?

b. The company spent and expensed 4150,000 on research related to the new product last year. would this change your answer? Explain.

c. 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?

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92751471

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