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The new Initial investment at various sale prices Novartis International AG is considering replacing one labeling system with a new model. The old system was
The new Initial investment at various sale prices Novartis International AG is considering replacing one labeling system with a new model. The old system was purchased 2 years ago for an installed cost of CHF 500,000. The firm is depreciating the label- ing system using a straight line amortization schedule for 5 years. machine costs CHf 700,000 and requires CHF 50,000 in installation costs. The firm is subject to a tax of 24%, including the cantonal tax rates. In each of the following cases, calculate the initial investment for the replacement. a. Novartis sells the old labeling system for CHF 400,000
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