question archive 1)Frozen, Inc

1)Frozen, Inc

Subject:AccountingPrice: Bought3

1)Frozen, Inc. spends $750,000 on equipment for a one-year expansion project. For this project, it increases its inventory by $150,000 and accounts payable by $25,000--both are expected to reverse at project completion. The project will be housed in a building Frozen, Inc. purchased seven years ago for $1,500,000. Frozen, Inc.'s tax rate is 50% and cost of capital is 12%. What is the initial outlay (i.e., initial investment, which is a cash outflow) in year 0?

2)A.-$750,000.00

3)B.-$2,375,000.00

  1. C.-$2,250,000.00
  2. D.-$875,000.00

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