Question: 1 1 - 1 : Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $ 1 7 million, and production

11-1: Talbot Industries is considering launching a new product. The new manufacturing
equipment will cost $17 million, and production and sales will require an initial
$5 million investment in net operating working capital. The companys tax rate is 25%.
a. What is the initial investment outlay?
b. The company spent and expensed $150,000 on research related to the new product
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 used. The building could be sold
for $1.5 million after taxes and real estate commissions. What is the initial investment outlay?

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