Total initial investment or cash outflow at time zero

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Reference no: EM131319135

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: EM131319135

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