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Talbot Industries is considering an expansion project. The necessary equipment could be purchased for $9 million, and the project would also require an initial $3 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 $50,000 on research related to the project last year. Would this change your answer? describe.

c.) The companyplans to house the project in a building it owns but is not now using. The building could be sold for $1 million after taxes and real estate commissions. How would this affect your answer?

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  • Category:- Basic Finance
  • Reference No.:- M941445

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