Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Initial investment Basic calculation Cushing Corporation is considering the purchase of a new grading machine to replace the existing one. The existing machine was purchased
Initial investment Basic calculation Cushing Corporation is considering the purchase of a new grading machine to replace the existing one. The existing machine was purchased 2 years ago at an installed cost of $19,300, it was being depreciated under MACRS using a 5 year recovery period. (See table for the applicable depreciation percentages.) The existing machine is expected to have a usable life of at least 5 more years. The new machine costs $34,000 and requires 55,200 in installation costs, it will be depreciated using a 5-year recovery period under MACRS. The existing machine can currently be sold for $24,500 without incurring any removal or cleanup costs. The firm is subject to a 40% tax rate. Calculate the initial investment associated with the proposed purchase of a new grading machine The initial investment will be $ (Round to the nearest dollar) 1 Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year Recovery year 5 years 7 years 20% 1496 25% 10 years 32% 19% 18 14% 4% 6% Enter your answer in the answer box and then All parts showing
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started