Calculate the incremental depreciation on the new

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The taylor corporation is using a machine that originally cost 88,000. the machine is being depreciated by the straight line method over 8 years (11,000 per year) and has 4 years of depreciation remaining. the machine has a book value of 66,000 and a current market value of 40,000. jacqueline elliot, the chief financial officer of taylor, is considering replacing this machine with a newer model costing 75,000. the new machine will save 7,000 in after tax earnings each year for the next six years. the nnew machine is in the 5 year MACRS categore. taylor cororation is in the 34% tax bracket and has a 10% cost of capital. A) calculate the cash inflow form the sale of the old machine. B) calculate the net cost of the new machine. C) calculate the incremental depreciation on the new versus the old machine. D) determine the net present value of the new machine. should they purchase the new manchine.

Reference no: EM13287906

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