51 A company is looking to invest in new machinery. The cost of the machinery, i

Question

51 A company is looking to invest in new machinery. The cost of the machinery, including shipping and installation costs, is $34.75 million. The company has a buyer for the old machinery who is willing to pay $3.2 million. Currently the book value of the old machinery is $4.8 million. The company will also invest working capital in additional inventory in order to sustain the higher levels of efficiency that come with the new machinery. The total investment in net working capital will be $2.9 million. What is the initial outlay if the company's marginal tax rate is 39962 Round your answer to 2 decimal places. $33.83 million $37.65 million O $41.47 million $39.25 million O$31.42 million NEXT > BOOKMARK CLEAR 2 QUESTI PREVIOUS

Explanation / Answer

Cost of Machinery 34.75 LesS: Cash inflow from sale of new machinery -3.2 Add: TaxSaving on loss on sae of machinery -0.624 (3.2-4.8)*0.39 Add: Working Capital 2.9 Initial Outlay 33.826 =33.83 million $(round off)

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