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 4 years ago at an installed cost of $19,600; 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 $5,100 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 5 (Round to the nearest dollar) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year 3 years 5 years 7 years Recovery year 1 33% 20% 14% 45% 32% 25% 15% 19% 18% 4 7% 12% 12% 12% 9% 5% 9% 9% 4% 100% 100% 100% 8 10 11 Totals 10 years 10% 18% 14% 12% 9% 8% 7% 6% 6% 6% 4% 100%