Twitz Corp. is looking at setting up a new manufacturing plant in Kennesaw, GA$.$ Twitz hadTwitz Corp. is looking at setting up a new manufacturing plant in Kennesaw, GA$.$ Twitz had

bought a piece of land $5$ years ago for $$2$ million thinking to use it as for expansion of its

warehouse, but Twitz decided to lease a building nearby for those purposes. Today, the value

of the land net of taxes is estimated at $$3\mathrm{.}4$ million. Twitz now wants to build a new

manufacturing plant for a new project called AAA$-$T on this land; the plant will cost $$10$

million to build, and the site requires $$1\mathrm{.}3$ million worth of improvements before it is suitable

for construction. Launching the project will require an investment in working capital today in

the amount of $$2\mathrm{.}4$ million. In addition, new equipment in the amount of $$4\mathrm{.}1$ million is

needed for the project. The tax rate is $40\%.$

What is the initial investment outlay $($IO$)$ for the NPV evaluation of this project? Enter your

answer in millions rounding to two decimals and use a negative when IO is a cash outflow.

For example, if you obtained a cash outflow of $$3,450,000$ then enter $-3\mathrm{.}45$ ; for a cash flow of

$$4,000,000$ then enter $-4\mathrm{.}00$

Your Answer:

Answer

bought a piece of land $5$ years ago for $$2$ million thinking to use it as for expansion of its

warehouse, but Twitz decided to lease a building nearby for those purposes. Today, the value

of the land net of taxes is estimated at $$3\mathrm{.}4$ million. Twitz now wants to build a new

manufacturing plant for a new project called AAA$-$T on this land; the plant will cost $$10$

million to build, and the site requires $$1\mathrm{.}3$ million worth of improvements before it is suitable

for construction. Launching the project will require an investment in working capital today in

the amount of $$2\mathrm{.}4$ million. In addition, new equipment in the amount of $$4\mathrm{.}1$ million is

needed for the project. The tax rate is $40\%.$

What is the initial investment outlay $($IO$)$ for the NPV evaluation of this project? Enter your

answer in millions rounding to two decimals and use a negative when IO is a cash outflow.

For example, if you obtained a cash outflow of $$3,450,000$ then enter $-3\mathrm{.}45$ ; for a cash flow of

$$4,000,000$ then enter $-4\mathrm{.}00$

Your Answer: