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What is the required cash outflow associated with acquistion

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Reference no: EM132920680

Question 1: Based on the information below, What is the required cash outflow associated with the acquisition of a new machine; that is, in a project analysis, what is the initial investment outlay at t = 0? Once the cash outflow is determined, what does this mean for a business?

Purchase price of new machine. $8,000
Installation charge 2,000
Market value of old machine 2,000
Book value of old machine 1,000
Inventory decrease if new machine is installed 1,000
Accounts payable increase if new machine is installed 500
Tax rate 34%
Required rate of return 15%

Reference no: EM132920680

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