Find what is the initial investment outlay

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Investment Outlay

Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $14 million, and production and sales will require an initial $1 million investment in net operating working capital. The company's tax rate is 35%.

Question 1: What is the initial investment outlay? Write out your answer completely. For example, 2 million should be entered as 2,000,000.

Question 2: The company spent and expensed $150,000 on research related to the new project last year. Would this change your answer?

  • yes
  • no

Question 3: 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?

  1. increase
  2. decrease
  3. not change

Reference no: EM132494900

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