Talbot industries is considering launching a new product, Ask an Expert

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Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $17 million, and production and sales will require an initial $5 million investment in net operating working capital. The company’s tax rate is 40%.

a. What is the initial investment outlay?

b. The company spent and expensed $150,000 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?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92100085

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