Question $3$

A company decides to invest in replacing an old machine. The company buys a new machine for $$125000.$ It sells the

old machine for $$25,000.$ The old machine had a book value of $$30,000$ at the time it was sold. The company's tax rate

is $35\%.$ What is the net cost of the investment in the new machine $($to be used in capital budgeting analysis$)?$

$$98,250\mathrm{.}00$

$$100,000\mathrm{.}00$

$$125,000\mathrm{.}00$

$$25,000\mathrm{.}00$