Question
A $90,000 machine with a 7-year class life was purchased 4 years ago. The machine will now be sold for $34,000 and replaced with a
A $90,000 machine with a 7-year class life was purchased 4 years ago. The machine will now be sold for $34,000 and replaced with a new machine costing $51,000, with a 5-year class life. The new machine will not increase sales, but will decrease operating costs by $16,000 per year. Simplified straight line depreciation is employed for both machines, and the marginal corporate tax rate is 34 percent. What is the initial outlay for the project? SET YOUR CALCULATOR TO 4 DECIMAL PLACES AND ROUND TO THE NEAREST WHOLE NUMBER AT THE END. FOR EXAMPLE, IF YOUR ANSWER IS 1,200.2288, ROUND TO 1200. DO NOT ENTER THE DOLLAR SIGN.
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