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J.B. Corporation is considering the purchase of equipment thathas an invoice price of $450

J.B. Corporation is considering the purchase of equipment thathas an invoice price of $450

J.B. Corporation is considering the purchase of equipment thathas an invoice price of $450,000. The equipment was recommended bya consulting firm that did an analysis for J. B. Corporation. J. B.paid the consulting firm $12,000 for its report. The cost ofshipping and installation is $50, 000. The equipment will bedepre4iated on a straight-line basis over its useful life of 10years, assuming no salvage vale. The equipment will replaceexisting assets that have a current book value of $100,000 andwhich could be sold for $150,000. Additional net working capital of$15,000 will be required to maintain the equipment and to supporthigher sales. J.B.’s marginal tax rate is 40%. Calculate theinitial outlay required to fund this project.

Abhinav 04-Dec-2019

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