5. The Olson Company plans to replace an old machine with a new one costing $85,000. The...
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5. The Olson Company plans to replace an old machine with a new one costing
$85,000. The old machine originally cost $55,000 and has 6 years of its expected 11-year life remaining. It has been depreciated straight line assuming zero salvage value and has a current market value of $24,000. Olson’s effective tax rate is 36%.
Calculate the initial outlay associated with selling the old machine and acquiring the new one.
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