The Finney Company is reviewing the possibility of remodeling one of its showroo

Question

The Finney Company is reviewing the possibility of remodeling one of its showrooms and buying some new equipment to improve sales operations. The remodeling would cost $270,000 now and the useful life of the project is 15 years. Additional working capital needed immediately for this project would be $75,000, the working capital would be released for use elsewhere at the end of the 15-year period. The equipment and other materials used in the project would have a salvage value of $55,000 in 15 years Finney's discount rate is 13%. (Ignore income taxes.) The immediate cash outflow required for this project would be: (Round discount factor (s) to 3 decimal places and final answer to the nearest dollar amount.) Multiple Choice $(195,000) $270.000) Prev32 of 32 19 17 64 15 56 78

Explanation / Answer

Immediate Cash outflow

Investment -270000 Net Working Capital -75000 Immediate Cash out flow -345000

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