Firm X is considering a new project. The cost of the machine is $155,000. The cost of shipping and installation is an ad

Business, Finance, Economics, Accounting, Operations Management, Computer Science, Electrical Engineering, Mechanical Engineering, Civil Engineering, Chemical Engineering, Algebra, Precalculus, Statistics and Probabilty, Advanced Math, Physics, Chemistry, Biology, Nursing, Psychology, Certifications, Tests, Prep, and more.
Post Reply
answerhappygod
Site Admin
Posts: 899603
Joined: Mon Aug 02, 2021 8:13 am

Firm X is considering a new project. The cost of the machine is $155,000. The cost of shipping and installation is an ad

Post by answerhappygod »

Firm X is considering a new project. The cost of the machine is$155,000. The cost of shipping and installation is an additional$10,000. Sales are expected to be $375,000 per year. The operating costs will be 60% of sales. The project willrequire an increase in net working capital of $35,000 and thebeginning of the project. The project will last four year at whichtime the firm will sell the machine for $25,000. The firm’stax rate is 20% and cost of capital is 8%. Assume the machineis fully depreciated at the end of the fourth year. What is thecost of the initial outlay?
Multiple Choice
$165,000
$155,000
$200,000
$190,000
Join a community of subject matter experts. Register for FREE to view solutions, replies, and use search function. Request answer by replying!
Post Reply