Tomatoes inc. is planning a project that involves machinery purchases of $100,000. The new equipment will be depreciated over five years straight-line. It will replace old machinery that will be sold for an estimated $33,000 and has a book value of $25,000.
The project will also require hiring and training 10 new people at a cost of about $12,000 each.
All of this must happen before the project is actually started. The firm's marginal tax rate is 40%. calculate C0, the project's initial cash outlay.