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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
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 = | $45,000 | |||||||
Current book value of old machine = | $8,000 | |||||||
Current market value of old machine = | $9,000 | |||||||
Tax Rate = | 25% | |||||||
Answers: | ||||||||
a. | $9,580 | |||||||
b. | ($13,250) | |||||||
c. | ($36,250) | |||||||
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