Question

Tannen Industries is considering an expansion. The necessary equipment would be purchased for $18 million, and the expansion would require an additional$2 million investment in net operating working capital. The tax rate is 40%. a. What is the initial investment outlay? b. The company spent and expensed $20,000 on research related to the project last year. Would this change your answer? Explain. c. The company plans to use a building that it owns to house the project. The building could be sold for$1 million after taxes and real estate commissions. How would that fact affect your answer?

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