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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 3
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 3 years ago at an installed cost of S20,100, 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 iMe of at least 5 more years. The new machine costs $35,500 and requires $4,800 in installation costs; it will be depreciated using a 5-year recovery period under MACRS. The existing machine can currently be so$24,500 without incurring any removal or cleanup costs. The firm is sub ect to a 40% tax rato Calculate the initial nvestment assoc ated with the proposed purchase of a new grading machine. Rounded Depreciation Percentages by Recovery Year Using MACRS o First Four Property Classes inital investment will be Parcentage by recovery yeart
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