Talbot Industries is considering launching a new product. The new manufacturing
ID: 2648116 • Letter: T
Question
Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $12 million, and production and sales will require an initial $5 million investment in net operating working capital. The company's tax rate is 35%.
What is the initial investment outlay? Write out your answer completely. For example, 2 million should be entered as 2,000,000.
$ ________
The company spent and expensed $150,000 on research related to the project last year. Would this change your answer?
_________________
Rather than build a new manufacturing facility, the company plans to install the equipment in a building it owns but is not now using. The building could be sold for $1.5 million after taxes and real estate commissions. How would this affect your answer?
The project's cost will _________________
Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $12 million, and production and sales will require an initial $5 million investment in net operating working capital. The company's tax rate is 35%.
What is the initial investment outlay? Write out your answer completely. For example, 2 million should be entered as 2,000,000.
$ ________
The company spent and expensed $150,000 on research related to the project last year. Would this change your answer?
_________________
Rather than build a new manufacturing facility, the company plans to install the equipment in a building it owns but is not now using. The building could be sold for $1.5 million after taxes and real estate commissions. How would this affect your answer?
The project's cost will _________________
Explanation / Answer
Cost of equipment = $12,000,000
(+) Net working capital required = $ 5,000,000
Total initial investment outlay = $17,000,000
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