The total initial investment or cash outflow at time zero

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Reference no: EM131317430

2013 2012 2011

Assets

Current Assets Cash 30,000 35,000 35,000

Short-Term Investments 20,000 15,000 5,000

Accounts Receivable 20,000 15,000 10,000

Inventory 50,000 45,000 50,000

Total 120,000 110,000 100,000

Non-Current Assets

Plant Assets 110,000 97,000 90,000

Accumulated Depreciation (10,000) (7,000) (6,000)

Plant Assets, net 100,000 90,000 84,000

Total Assets 220,000 200,000 184,000

Liabilities

Accounts Payable 55,400 50,000 51,000

Long-Term Debt 80,000 75,000 70,000

Total Liabilities 135,400 125,000 121,000

Stock Holders Equity

Common Stock 45,000 45,000 45,000

Retained Earnings 39,600 30,000 18,000

Total Stockholders' Equity 84,600 75,000 63,000

Total Liabilities & Stockholders' Equity 220,000 200,000 184,000

Your company plans to purchase a machine worth P250,000 which will be depreciated over five years using straightline method. There will be no salvage value. An installation cost of P50,000 is required to make the new machine operational. This new machine will replace a unit purchased three years ago for P240,000 with accumulated depreciation amounting to P90,000. Said machine can be sold today at P255,000. With the purchase of the machine is an additional working capital requirement of P5,000. Tax rate is 34 percent. How much is the total (net) initial investment or cash outflow at time zero?

Reference no: EM131317430

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