A consultant has recommended that you modernize a production line. Costs include

Question

A consultant has recommended that you modernize a production line. Costs include $650,000 in equipment, a $10,000 investment in net working capital at the time of installation, and $5,000 in delivery and installation costs. The consultant has billed the firm for $7,500 for her analysis of the project. If the project is undertaken, an employee training program costing $8,000 would be required. The old machinery has no book value but can be sold for $100,000. Your firm's marginal tax rate is 34%. What is the initial outlay associated with the project?

Explanation / Answer

Hi Answer would be $ 607000 and it will be calculated as follows: 650000+10000+5000+8000-66000 = 607000 Thanks Aman

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