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PART 3: BONUS PROBLEM (5 points) AMD is replacing an old machine that cost $100,000 five years ago, with a new, more efficient machine that
PART 3: BONUS PROBLEM (5 points) AMD is replacing an old machine that cost $100,000 five years ago, with a new, more efficient machine that will cost $200,000. Shipping and installation will cost an additional $20,000. The old machine has a book value of $15,000 but will be sold for $5,000. The new machine will be depreciated with a 5-year life under MACRS guidelines. With the increased production, inventories will increase $10,000, accounts receivable will increase $12,000, and accounts payable will increase $15,000. If AMD has a marginal tax rate of 40 percent, what is the net investment of this replacement
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