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Question 5 Not yet answered Marked out of 1.00 ABC CO. Ltd is trying to determine the initial investment required to replace an old machine
Question 5 Not yet answered Marked out of 1.00 ABC CO. Ltd is trying to determine the initial investment required to replace an old machine with a new one. The new machine's purchase price is $300,000 including installation costs. It will be depreciated under straight line depreciation using a 5-year recovery period and a salvage value of $20,000. The present machine was purchased 2 years ago at a price of $200,000 and was being depreciated under straight line depreciation method using a 5-year recovery period and a salvage value of $20,000. The firm has found a buyer willing to pay $158,000 for the present machine and to remove at his expense. The firm expects a change in net working capital of 20,000 as a result of this replacement. Both ordinary income and capital gains are taxed at a rate of 40%. The firm's initial investment is Flag question Select one: O a. $183,500 O b. $72,000 O c. $174,000 O d. $124,200 NEXT PAGE PREVIOUS PAGE & O II hp Question 5 Not yet answered Marked out of 1.00 ABC CO. Ltd is trying to determine the initial investment required to replace an old machine with a new one. The new machine's purchase price is $300,000 including installation costs. It will be depreciated under straight line depreciation using a 5-year recovery period and a salvage value of $20,000. The present machine was purchased 2 years ago at a price of $200,000 and was being depreciated under straight line depreciation method using a 5-year recovery period and a salvage value of $20,000. The firm has found a buyer willing to pay $158,000 for the present machine and to remove at his expense. The firm expects a change in net working capital of 20,000 as a result of this replacement. Both ordinary income and capital gains are taxed at a rate of 40%. The firm's initial investment is Flag question Select one: O a. $183,500 O b. $72,000 O c. $174,000 O d. $124,200 NEXT PAGE PREVIOUS PAGE & O II hp
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