ZuoTi.Pro
Question

Spokane, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment...

Spokane, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.8 million. The fixed asset falls into the 3-year MACRS class (0.3333, 0.4445, 0.1481, 0.0741) and will have a market value of $214,200 after 3 years. The project requires an initial investment in net working capital of $306,000. The project is estimated to generate $2,448,000 in annual sales, with costs of $979,200. The tax rate is 34 percent and the required return on the project is 8 percent. What is the initial capital outlay for the project?

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

The initial capital outlay is computed as shown below:

= Investment in fixed assets + Investment in working capital

= $ 2,800,000 + $ 306,000

= $ 3,106,000

Feel free to ask in case of any query relating to this question      

1 0
Add a comment
Know the answer?
Add Answer to:
Spokane, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment...

    Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.754 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will be worthless. The project is estimated to generate $2,448,000 in annual sales, with costs of $979,200 If the tax rate is 21 percent, what is the OCF for this project? Multiple Choice 0 $1285,475 0 $1353,122 $1.420,799 O $1469,000 0 $435,132

  • Cochran Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment...

    Cochran Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2,290,000. The fixed asset falls into the three-year MACRS class (MACRS schedule). The project is estimated to generate $1,790,000 in annual sales, with costs of $684,000. The project requires an initial investment in net working capital of $410,000, and the fixed asset will have a market value of $420,000 at the end of the project. A. If the tax rate is 21 percent,...

  • Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment...

    Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.9 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $222,600 after 3 years. The project requires an initial investment in net working capital of $318,000. The project is estimated to generate $2,544,000 in annual sales, with costs of $1,017,600. The tax rate is 24 percent and the required return on the project...

  • Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment...

    Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $5.8 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $453,600 after 3 years. The project requires an initial investment in net working capital of $648,000. The project is estimated to generate $5,184,000 in annual sales, with costs of $2,073,600. The tax rate is 24 percent and the required return on the project...

  • Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment...

    Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.9 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $151,200 after 3 years. The project requires an initial investment in net working capital of $216,000. The project is estimated to generate $1,728,000 in annual sales, with costs of $691,200. The tax rate is 21 percent and the required return on the project...

  • quad enterprises is considering a new three-year expansion project that requires an initial fixed asset investment...

    quad enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of 2.38 million.The fixed asset falls into three-year MACRS class. The project is estimated to generate 1,805,000 in annual sales, with costs of 696,000. The project requires an initial investment in net working capital of 440,000, and the fixed asset will have a market value of 465,000 at the end of the project. a. If the tax rate is 24 percent, what is the...

  • Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment...

    Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $5.7 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $441,000 after 3 years. The project requires an initial investment in net working capital of $630,000. The project is estimated to generate $5,040,000 in annual sales, with costs of $2,016,000. The tax rate is 24 percent and the required return on the project...

  • Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset...

    Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $6.3 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $491,400 after 3 years. The project requires an initial investment in net working capital of $702,000. The project is estimated to generate $5,616,000 in annual sales, with costs of $2,246,400. The tax rate is 33 percent and the required return on the...

  • Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset...

    Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $6.2 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $478,800 after 3 years. The project requires an initial investment in net working capital of $684,000. The project is estimated to generate $5,472,000 in annual sales, with costs of $2,188,800. The tax rate is 30 percent and the required return on the...

  • H. Cochran Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment...

    H. Cochran Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2,350,000. The fixed asset falls into the three-year MACRS class (MACRS schedule). The project is estimated to generate $1,745,000 in annual sales, with costs of $648,000. The project requires an initial investment in net working capital of $320,000, and the fixed asset will have a market value of $285,000 at the end of the project. a. If the tax rate is 22...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT