Terra Corp is considering an expansion project.The necessary equipment could be purchased for $15 million and shipping and installation costs are another $500,000.The project will also require an initial $2 million investment in net working capital.The company's tax rate is 40%.What is the project's initial investment outlay (in millions)?
A)$15.0
B)$15.5
C)$17.0
D)$17.5

Question

Quizplus · Accepted Answer

The initial investment outlay includes the cost of equipment ($15 million), shipping and installation costs ($500,000), and the investment in net working capital ($2 million). Adding these together gives $15 million + $0.5 million + $2 million = $17.5 million.

Terra Corp Is Considering an Expansion Project