A company plans to replace old equipment with new, more efficient equipment. The company spent $100,000 on market research and consulting a few months ago. He purchased the old equipment 20 years ago for $1,800,000. Old equipment was depreciated for $300,000 and has a market value of $100,000 today. The new equipment will cost $2,800,000. It costs $80,000 for shipping and $100,000 for required training to get the equipment operational. With expected growth due to equipment replacement, the company needs to invest $120,000 in working capital. The marginal tax rate is 34%. What is the initial cost of this project to replace old equipment?

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Given information Market research and consulting cost 100000 Purchase cost of old equipment 1800000 ... View the full answer