Question: Hi I need help answer the following question What is the amount of initial investment for the following project? The project requires buying a piece
What is the amount of initial investment for the following project? The project requires buying a piece of new equipment costing $300,000, which will be depreciated straight-line to zero over 3 years. At the end of the third year of operation, the equipment will be sold for $100.000. The new project will generate $500,000 in annual sales and incur $200,000 in annual cost excluding depreciation for each of the next three years. The project also requires an immediate investment in net working capital of $100,000, which will be fully recovered at the end of three years. The average tax rate for the company is 40%. KD $380.000 KDI $500.000 $400,000 $300.000
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