Calculate the initial investment for the replacement

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Reference no: EM13974611

Edwards manufacturing company is considering replacing one machine with another. The old machine was purchased 3 years ago for an installed cost of $10,000. The firm is depreciating the machine under MARCS, using a 5-year recover period. The new machine costs $24,000 and requires 2,000 in installation costs. The firm is subject to a 40% tax rate. In each of the following cases, calculate the initial investment for the replacement. Please show the work.

a. EMC sells the old machine for $11,000

b. EMC sells the old machine for $7,000

c. EMC sells the old machine for $2,900

d. EMC sells the old machine for $1,500

Reference no: EM13974611

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