Exhibit 9-2
The following data are projected for a possible investment project:

-Refer to Exhibit 9-2.The project requires an initial investment of $300,000.Working capital is anticipated to be variable at 10% of revenues; the working capital investment must be made at the beginning of each period,and will be recaptured in full at the end of year 4.The tax rate is 40%.
What is the initial cash outlay?

Question

Exhibit 9-2
The following data are projected for a possible investment project:
 
-Refer to Exhibit 9-2.The project requires an initial investment of $300,000.Working capital is anticipated to be variable at 10% of revenues; the working capital investment must be made at the beginning of each period,and will be recaptured in full at the end of year 4.The tax rate is 40%.
What is the initial cash outlay?

Quizplus · Accepted Answer

initial cash outlay = working capital $12,000 + initial investment $300,000

Exhibit 9-2 The Following Data Are Projected for a Possible Investment Project