The Director of Capital Budgeting of Capital Assets Corp.is considering the acquisition of a new high speed photocopy machine.The photocopy machine is priced at $85,000 and would require $2000 in transportation costs and $4000 for installation.The equipment will have a useful life of five years.The proposal will require that Capital Assets Corp.send a technician for training at a cost of $5000.The firm's marginal tax rate is 40%.How much is the initial cash outlay of the photocopy machine?

Question

Quizplus · Accepted Answer

The initial cash outlay for the photocopy machine includes the purchase price, transportation costs, installation costs, and training costs, totaling $96,000 ($85,000 + $2,000 + $4,000 + $5,000).