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How much will be the initial investment

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Question - ABC is considering replacing the existing unit with a newer, more efficient one. The unit, which originally cost $500,000, currently has a book value of $250,000. The new unit will cost $700,000 and in order to make the new unit operational, shipping and installation costs will require a further $50,000 investment. ABC can sell the existing machine today for $275,000. Assume ABC's tax rate is 30 percent. How much will be the initial investment of replacing the existing unit?

Reference no: EM132632952

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