=+LG 3 LG 4 P1113 Initial investment at various sale prices Novartis International AG is considering replacing

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=+LG 3 LG 4 P11–13 Initial investment at various sale prices Novartis International AG is considering replacing one labeling system with a new model. The old system was purchased 2 years ago for an installed cost of CHf 500,000. The firm is depreciating the labeling system using a straight line amortization schedule for 5 years. The new machine costs CHf 700,000 and requires CHf 50,000 in installation costs. The firm is subject to a tax of 24%, including the cantonal tax rates. In each of the following cases, calculate the initial investment for the replacement.

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Akshay Agarwal

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