Company marginal tax rate

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A company is looking to invest in a new asset. The cost of the asset, including shipping and installation costs, is $8.4 million. The company has a buyer for the old asset who is willing to pay $1.2 million. Currently the book value of the old asset is $0. The company will also invest working capital in additional inventory in order to sustain the higher levels of efficiency that come with the new machinery. The total investment in net working capital will be $1.5 million.

What is the initial outlay if the company's marginal tax rate is 39%?

Reference no: EM131908488

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