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Determine the net initial investment required

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Ten years ago J-Bar Company purchased a lathe for $250,000. It was being depreciated on a straight-line basis to an estimated $25,000 salvage value over a 15-year period. The firm is considering selling the old lathe and purchasing a new one. The new lathe would cost $500,000. The firm's marginal tax rate is 40 percent. Determine the net initial investment required to purchase the new lathe if the old lathe is sold for $100,000.

Reference no: EM132673490

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