Question
jempoy company is planning to purchase a new machine costing 100000,with freight and installation cost amounting to 3000. the old unit to be traded in
jempoy company is planning to purchase a new machine costing 100000,with freight and installation cost amounting to 3000. the old unit to be traded in will be given a trade in allowance of the new machine can be salvage and sold for 6000, the loss on retirement of these other asset is 12000 which will reduce income taxes by 8000. if the new equipment is not purchase, extensive repair on the old equipment will have to be made at an estimated cost of 8000. this cost can be avoided by purchasing the new equipment. addition gross working capital of 24000 will be neede to support operation planned with the new equipment. the net investment assign to the machine for decision analysis
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