Question

Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $20 million, and production and sales will require an initial $3 million investment in net operating working capital. The company's tax rate is 35%. What is the initial investment outlay

Answer 1

the initial investment outlay is $23,000,000

Step-by-step explanation:

The computation of the initial investment outlay is given below:

Initial Investment Outlay = New Equipment Cost + Requirement of Working Capital

= $20,000,000 + $3,000,000

= $23,000,000

hence, the initial investment outlay is $23,000,000

We simply added the above two items