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What is the initial investment we would need

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Replace an existing palletizer that has been in operation for 6 years. We paid $550,000 for the palletizer + 20% more to install it. It is being depreciated using a 7 year-recovery period under MACRS. The new palletizer I am looking at is state of the art but comes at a hefty cost of $725,000 + 20% to install it. President Trump's new tax plan is not in effect yet so we are still held to a 35% tax rate. Our Net Working Capital is expected to increase by $20,000 due to pallet inventories which need to increase. A small business owner will pay us $90,000 for our older palletizer. What is the Initial investment we would need in order to make this capital project a reality?

Reference no: EM132199238

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