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| Calamity Cauliflower Corporation is considering undertaking a capital project. The company would have to commit $24,000 of working capital in addition to an immediate outlay of $160,000 for new equipment. The project is expected to generate $100,000 of annual income for 10 years. At the end of that time, the new equipment, which will be depreciated on a straight-line basis, is expected to have a salvage value of $10, The existing equipment that would be sold to make room for the project has a historical cost of $220,000 and accumulated depreciation of $208, It has an estimated remaining useful life of 2 years and the remaining carrying amount is being depreciated on a straight-line basis. A scrap dealer has agreed to buy it for $8, The company’s effective tax rate is 40%.The net initial investment required for Calamity Cauliflower to undertake this capital project is The net initial investment required for Calamity Cauliflower to undertake this capital project is A. $184,000 B. $176,000 C. $174,400 D. $160,000 |