A consultant has recommended that you modernize a production line. Costs include $650,000 in equipment, a $10,000 investment in net working capital at the time of installation, and $5,000 in delivery and installation costs. The consultant has billed the firm for $7,500 for her analysis of the project. If the project is undertaken, an employee training program costing $8,000 would be required. The old machinery has no book value but can be sold for $100,000. Your firm's marginal tax rate is 34%. What is the initial outlay associated with the project?

$607,000

Explanation:

Calculation for the initial outlay associated with the project

INITIAL OUTLAY

Equipment $650,000

Delivery and installation costs

$5,000

Investment in net working capita$10,000

Employee training program$8,000

Less:Old machinery After tax sale value ($66,000)

Initial outlay $607,000

Calculation for the after sale tax value of the old machinery

After tax sale value =$100,000×(1-0.34)

After tax sale value=$100,000×0.66

After tax sale value=$66,000

Therefore the initial outlay associated with the project will be $607,000

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- rich people tend to have more capital in their disposal. this would benefit them in business since it is far easier for them to fund their business operation compared to poor people.

answercold,maybe nuclear war;