Firm X is considering a new project. The cost of the machine is $155,000. The cost of shipping and installation is an ad
Posted: Fri Jul 01, 2022 7:51 am
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
Multiple Choice
$165,000
$155,000
$200,000
$190,000