1. Investment Outlay
Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $9 million, and production and sales will require an initial $5 million investment in net operating working capital. The company's tax rate is 35%.
What is the initial investment outlay? Write out your answer completely. For example, 2 million should be entered as 2,000,000.
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2. Net Salvage Value
Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost $16 million, of which 80% has been depreciated. The used equipment can be sold today for $5.6 million, and its tax rate is 35%. What is the equipment's after-tax net salvage value? Write out your answer completely. For example, 2 million should be entered as 2,000,000.
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