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    Computation of Cash Outflow

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    (Ignore income taxes in this problem.) The Finney Company is reviewing the possibility of remodeling one of its showrooms and buying some new equipment to improve sales operations. The remodeling would cost $120,000 now and the useful life of the project is 10 years. Additional working capital needed immediately for this project would be $30,000; the working capital would be released for use elsewhere at the end of the 10-year period. The equipment and other materials used in the project would have a salvage value of $10,000 in 10 years. Finney's discount rate is 16%.

    85. The immediate cash outflow required for this project would be:
    A) $(120,000). C) $(90,000).
    B) $(150,000). D) $(130,000).

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    Solution Summary

    This solution explains the computation of cash outflow of the project through the example.