Given the following information, what is the required cash outflow associated with the acquisition of a new machine; that is, in a project analysis, what is the initial investment outlay at t = 0? (need answer, and explanation) Purchase price of new machine $8,000 Installation charge 2,000 Market value of old machine 2,000 Book value of old machine 1,000 Inventory decrease if new machine is installed 1,000 Accounts payable increase if new machine is installed 500 Tax rate 34% Required rate of return 15%
Given the following information, what is the required cash outflow associated with the acquisition of a new machine; that is, in a project analysis, what is the initial investment outlay at t = 0? (need answer, and explanation) Purchase price of new machine $8,000 Installation charge 2,000 Market value of old machine 2,000 Book value of old machine 1,000 Inventory decrease if new machine is installed 1,000 Accounts payable increase if new machine is installed 500 Tax rate 34% Required rate of return 15%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Given the following information, what is the required
(need answer, and explanation)
|
Purchase price of new machine |
$8,000 |
|
Installation charge |
2,000 |
|
Market value of old machine |
2,000 |
|
Book value of old machine |
1,000 |
|
Inventory decrease if new machine is installed |
1,000 |
|
Accounts payable increase if new machine is installed |
500 |
|
Tax rate |
34% |
|
Required |
15% |
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