Investment Outlay Talbot Industries is considering launching a new product. The

Question

Investment Outlay

Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $10 million, and production and sales will require an initial $4 million investment in net operating working capital. The company's tax rate is 30%.

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 new product last year. Would this change your answer?
-Select-YesNoItem 2

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 -Select-increasedecreasenot changeItem 3 .

Explanation / Answer

Case 1: Initial investment outlay $                                   14,000,000 10000000+4000000 Case 2: Initial investment outlay $                                   14,000,000 No my answer will not change 10000000+4000000 Case 3: Initial investment outlay $                                   15,500,000 Project cost will increase 10000000+4000000+1500000

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