1. A project has an initial cost of $40,000, expected net cash inflows of $10,000 per year...
Question:
1. A project has an initial cost of $40,000, expected net cash inflows of $10,000 per year for 7 years, and a cost of capital of 12%. What is the project's payback period? Round your answer to two decimal places.
2. Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $20 million, and production and sales will require an initial $5 million investment in net operating working capital. The company's tax rate is 25%. Enter your answers as a positive values. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answers to two decimal places.
- a. What is the initial investment outlay?
b. The company spent and expensed $150,000 on research related to the new project last year. What is the initial investment outlay?
c. 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 $1.3 million after taxes and real estate commissions. What is the initial investment outlay?
Intermediate Financial Management
ISBN: 978-1285850030
12th edition
Authors: Eugene F. Brigham, Phillip R. Daves