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* Question Completion Status: $782,750 $785,250 QUESTION 16 Milton Industries wants to purchase new equipment that has a quoted price of $1,000,000. Milton estimates an additional cost of $85,000 will be needed today to have the equipment modified, shipped, and installed. The purchase of this additional equipment will require Milton to invest an estimated $55,000 in net working capital upfront, and this investment should be recovered when Milton sells the equipment. If purchased, the equipment will be employed for a total of five years, and then sold for an estimated $640,000. The equipment will be depreciated straight-line on a five-year schedule. During each of the years that the equipment is in service, it is expected to boost Milton's sales revenue by $298,000 though annual operating costs (other than depreciation) are also expected to be higher, to the extent of $74,000. Milton faces a marginal tax rate of 25%, and its cost of capital is 7.25%. The amount of initial (time 0) outflow of cash for this project is expected to be: $1,120,000 $1,140,000 $1,160,000 $1,170,000 $1,150,000 QUESTION 17 Delta Corp has 6.5% coupon semiannual bonds outstanding (face value of $1000), with 10 years left to maturity, and a price of $840. The firm's marginal tax rate is 25%. Delta's marginal pre-tax cost of debt is estimated to be: 8.40% Click Save and Submit to save and submit. Click Save An Ansters to save all answers Save

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