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Your company is evaluating a project that will require the purchase of an asset with a...

Your company is evaluating a project that will require the purchase of an asset with a price of $16,000 the shipping will cost an additional $1,500 and installation will be $850. The new project will require an increase in inventory of $300, an increase in A/R of $200 and an increase in A/P of $100 in the initial period.

Assuming tax rate of 30%, what is the initial outlay, in year 0, for this project?

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Expert Solution

Total machinery cost=16,000+1500+850=$18350

Working capital=inventory+Accounts receiavbles-Accounts payables=300+200-100=400

Total Initial outlay=18350+400=$18,750

jeff jeffy answered 2 years ago
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