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A firm has an opportunity to invest in a new device that will replace two of the firm's older machines. The new device costs $570,000 and requires an additional outlay of $30,000 to cover installation and shipping. The new device will cause the firm to increase its net working capital by $20,000. Both the old machines can be sold-the first for $100,000 (book value equals $95,000) and the second for $150,000 (book value equals $75,000). The original cost of the first machine was $200,000, and the original cost of the second machine was $140,000. The firm's marginal tax bracket is 40 percent. Compute the net investment for this project.

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  • Category:- Basic Finance
  • Reference No.:- M944130

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