Question: Required investment. Truman industries is considering expansion. The necessary equipment would be purchased for $9 million, and the expansion would require an additional $3 million investment in net operating working capital. The tax rate is 40%.

1. what is the initial investment outlay?
2. The company spent and expensed $50,000 on research related to the project last year. Would this change your answer? Explain.
3. The company plans to use a building that it owns to house the project. The building could be sold for $1 mill after taxes and real estate commissions. How would that fact affect your answer?

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