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 under

MACRS, using a 5-year recovery period. (See Table 4.2 on page 120 for the applicable

depreciation percentages.) The new machine costs $24,000 and requires

$2,000 in installation costs. The firm is subject to a 40% tax rate. In each of the following

cases, calculate the initial investment for the replacement.

a. EMC sells the old machine for $11,000.

b. EMC sells the old machine for $7,000.

c. EMC sells the old machine for $2,900.

d. EMC sells the old machine for $1,500.