Find what is the amount of cash outflow

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Problem 1: The Management of Gordon company plans to replace a sorting machine that was acquired several years ago at a cost 600,000. The machine has been depreciated to its salvage value of 50,000. A new sorter be purchased for 700,000. The dealer will grant a trade in allowance of 60,000 on the old machine. If a new machine is not purchased, the company will spend 250,000 to repair the old machine. Income tax is estimated at 40% of the income subject to tax. What is the amount of cash outflow?

Reference no: EM132637587

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