=+P1112 Initial investment: Basic calculation Sony Pacific Music Corporation is considering the purchase of a new sound
Question:
=+P11–12 Initial investment: Basic calculation Sony Pacific Music Corporation is considering the purchase of a new sound board, used in recording studios to improve sound effects. The existing sound board was purchased 3 years ago at an installed cost of $23,500; it was being depreciated under MACRS, using a 5-year recovery period. (See Table 4.2 for the applicable depreciation percentages.) The existing sound board is expected to have a usable life of at least 4 more years. The new sound board costs $38,800 and requires
$5,400 in installation costs; it will be depreciated using a 5-year recovery period under MACRS. The existing sound board can currently be sold for $27,300 without incurring any removal or cleanup costs. The firm is subject to a 20% tax rate. Calculate the initial investment associated with the proposed purchase of a new sound board.
Step by Step Answer:
Principles Of Managerial Finance
ISBN: 9781292261515
15th Global Edition
Authors: Chad J. Zutter, Scott Smart