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Initial cash flow: Basic calculation Cushing Corporation is considering the purchase of a new grading machine to replace the existing one. The existing machine was
Initial cash flow: Basic calculation Cushing Corporation is considering the purchase of a new grading machine to replace the existing one. The existing machine was purchased
years ago at an installed cost of $; it was being depreciated under MACRS using a year recovery period. See table for the applicable depreciation percentages. The
existing machine is expected to have a usable life of at least more years. The new machine costs $ and requires $ in installation costs; it will be depreciated using a
year recovery period under MACRS. The existing machine can currently be sold for $ without incurring any removal or cleanup costs. The firm is subject to a tax rate.
Calculate the initial cash flow associated with the proposed purchase of a new grading machine.
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