40. A fi rm may invest $30,000 in a numerically controlled lathe for use in furniture manufacturing (MACRS-GDS 7-year property). It would last for 11 years and have zero salvage value at that time. Alternatively, the fi rm could invest $X in a methods improvement study (this is non-depreciable). Each of the investment alternatives will yield an increase in income of $15,000 for 11 years. If the tax rate for the fi rm is 40 percent, for what value of $X will the fi rm be indifferent between the two investment alternatives? The after-tax MARR is 15 percent.

(Hint: Excel® SOLVER would be an excellent way to determine the answer.)