What is the initial outlay required to fund project

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You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck. since you are not an expert on industrial vehicles, you hire a consulting firm to make recommendations. the consultant charged you $1,500 and recommended the purchase of a model CP8 truck. the trucks basic price is $40,000, and it will cost another 10000 to modify it for special use by your firm. the truck will be depreciated using IRS guidelines that require depreciation expense to 33% of initial depreciation value in year one, 45% of the initial depreciable value in year two, and 15% of the initial depreciable value in year three. the company expects to sell the new truck after three years for $20,000. use of the truck will require an increase in the companys net working capital of $2,000 but this $2,000 may be recovered at the end of year three. the truck will have no effect on revenues, but it is expected to save the firm $25,000 per year in before-tax operating costs, mainly labor. the firms marginal tax rate is 40%. what is the initial outlay required to fund this project?

Reference no: EM13268305

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