A firm has an opportunity to invest in a new device that will replace two of the firm's older machines. The new device costs 570,000 dollars and requires an additional outlay of 30,000 dollars to cover installation and shipping. The new device will require the firm to increase its net working capital by 20,000 dollars. Both the old machines can be sold, the first for 100,000 (book value equals 95,0000) and the second for $150,000 (book value equals 75,000 dollars. the original cost of the first machine was 200,000 dollars, and the original cost of the second machine was 140,000 dollars. the firms marginal tax bracket is 40 percent. Compute the net investment for this project.

Question

A firm has an opportunity to invest in a new device that will replace two of the firm's older machines.  The new device costs 570,000 dollars and requires an additional outlay of 30,000 dollars to cover installation and shipping.  The new device will require the firm to increase its net working capital by 20,000 dollars. Both the old machines can be sold, the first for 100,000 (book value equals 95,0000) and the second for $150,000 (book value equals 75,000 dollars.  the original cost of the first machine was 200,000 dollars, and the original cost of the second machine was 140,000 dollars.  the firms marginal tax bracket is 40 percent. Compute the net investment for this project.