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Initial outlay of project to replace old equipment

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Reference no: EM132558433

A company is planning to replace old equipment with new, more efficient equipment. The company spent $100,000 on a market study and consulting a few months ago. It purchased the old equipment 20 years ago for $1,800,000. The old equipment is depreciated to $300,000 and has a market value of $100,000 today. The new equipment will cost $2,800,000. In order to make the equipment operable, it costs $80,000 for shipping and $100,000 for necessary training. With the anticipated growth due to the equipment replacement, the company has to invest $120,000 in working capital. The marginal tax rate is 34%. What is the initial outlay of this project to replace old equipment?

Reference no: EM132558433

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