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1 A company is contemplating the replacement of its old printing machine with a new model. The details of this transaction are below. If the
| 1 | A company is contemplating the replacement of its old printing machine with a new model. The details of this transaction are below. If the company sells the old machine at market value, what is the net after-tax outlay for the new printing machine? | ||||||||
| Cost of the new machine = | $35,000 | ||||||||
| Current book value of old machine = | $8,000 | ||||||||
| Current market value of old machine = | $7,000 | ||||||||
| Tax Rate = | 25% | ||||||||
| a. | $9,580 | ||||||||
| b. | ($13,250) | ||||||||
| c. | ($27,750) | ||||||||
| Note: The negative numbers simply means that this is a net cash outflow. | |||||||||
| ANS: | |||||||||
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Personal Financial Planning
Authors: Randy Billingsley, Lawrence J. Gitman, Michael D. Joehnk
15th Edition
978-0357438480, 0357438485
