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A firm has decided to replace an existing asset with a newer model. Theexisting asset originally cost $30,000. The current book value of the existing
A firm has decided to replace an existing asset with a newer model. Theexisting asset originally cost $30,000. The current book value of the existing asset for tax purposes is $14,400. The existing asset can be sold for $25,000.The new asset will cost $ 75,000. If the assumed tax rate is 40%on ordinary income and capital gains, what is the initial investment?
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