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 for the applicable depreciation percentages) The new machine costs $24,100 and requires $1,950 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 $12,800 b. EMC sells the old machine for $7,090 c. EMC sells the old machine for $2,900. d. EMC sells the old machine for $1,530 CATED Calculate the initial investment at various sale prices below a. EMC sells the old machine for $12,000 (Round to the nearest dollar) (a) Cost of new asset $ Installation cost Total installed cost Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year" 3 years Recovery year 7 years 5 years 1 33% 20% 14% 25% 2 45% 32% 3 15% 18% 19% 4 7% 12% 12% 12% 9% 5 5% 9% 9% 4% 100% 100% 100% 6 H960 10 11 Totals 10 years 10% 18% 14% 12% 9% 8% 7% 6% 6% 6% 4% 100% 19 nir e In