What is the initial investment outlay

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Tannen Industries is considering an expansion. The necessary equipment would be purchased for $18 million, and the expansion would require an additional $2 million investment in net operating working capital. The tax rate is 40%.

a. What is the initial investment outlay?

b. The company spent and expensed $20 million on research related to the project; last year. Would this change your answer? Explain.

c. The company plans to use a building that it owns to house the project the building could be sold for $1 million after taxes and real estate commissions. How would that fact affect your answer?

Reference no: EM131899798

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