Chapter 11 682018 3. Initial investment at various sale prices Edwards Manufacturing Company (EMC) is considering replacing one machine with another. The old machine was purchased 3 years ago for an installed cost of $10,000. The firm is depreciating the machine machine costs S23 400 and requires S subject to a 40% tax rate In each of the following cases, calculate the iniial investment for the replacement a, EMC sells the old machine for $12,500 b. EMC sells the old machine for $7,040 c. EMC sells the old machine for $2,900 d. EMC sells the old machine for $1,540. under MACRS, using a 5-year recovery period. (See table 2 for the 1,980 in installation costs. The firm is percentages.) The new Calculate the initial investment at various sale prices below a. EMC sells the old machine for $12,500. (Round to the nearest dollar Cost of new asset Instalation cost Total installed cost Proceeds from sale of old asset Tax on sale of old asset Total after-tax proceeds Initial investment $ b. EMC sells the old machine for $7,040. (Round to the nearest dollar.) Cost of new asset Installation cost Total installed cost $ 23,400 1,980 $ 25,380 Proceeds from sale of old asset $ Tax on sale of old asset Total after-tax proceeds Initial investment c. EMC sells the old machine for $2,900. (Round to the nearest dollar.)