What is the initial outlay for the project

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Question - You are evaluating a potential investment in equipment. The equipment's basic price is $187,000, and shipping costs will be $3,700. It will cost another $22,400 to modify it for special use by your firm, and an additional $9,400 to install it. The equipment falls in the MACRS 3-year class that allows depreciation of 33% the first year, 45% the second year, 15% the third year, and 7% the fourth year. You expect to sell the equipment for 24,500 at the end of three years. The equipment is expected to generate revenues of $165,000 per year with annual operating costs of $91,000. The firm's marginal tax rate is 35.0%. What is the initial outlay for the project?

Reference no: EM132997656

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