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
Related questions
Question
Your company is evaluating an investment project. The project would require buying a piece of machinery that costs $23.43 million dollars. As part of the effort to raise money for the project, your company will also sell an old piece of machinery right away which will generate an estimated after-tax salvage of $11.39 million dollars.
Assuming the above are all the investment-related activities for your company. What're the project's initial cash flows from investing activities?
Note: your answer should be in millions of dollars.
Expert Solution
Step 1
Cash flow from Investing Activity:
- It shows the management of cash from the investing activities like purchase of long-term assets, sale of long-term assets.
Information Provided:
After-tax salvage of machinery = $11.39 million
Cost of machinery = $23.43 million
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