Question

Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $10 million, and production and sales will require an initial $4 million investment in net operating working capital. The company's tax rate is 40%. What is the initial investment outlay? Enter your answer as a positive value. Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Round your answer to the nearest dollar.

Answer 1

$14,000,000

Step-by-step explanation:

The initial investment outlay of Talbot Industries will be $14,000,000

initial investment outlay = New equipment cost + Operating working capital

= $10,000,000 + $4,000,000 = $14,000,000