A corporation has decided to replace an existing asset with a newer model. Two years ago, the existing asset originally cost $70,000 and was being depreciated under MACRS using a five-year recovery period. The existing asset can be sold for $30,000. The new asset will cost $80,000 and will also be depreciated under MACRS using a five-year recovery period. If the assumed tax rate is 40 percent on ordinary income and capital gains, the initial investment is ________.

a.) $49,240

b.$27,600

c.$48,560

d.)$44,360

MACRS RATE 133% 245 315 20% 32 14% 25 18 10% 18 12 12 99 5 98 10