Initial after tax outlay for the new printing machine

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The Target Company is contemplating the replacement of its old printing machine with a new model costing $60,000. The old machine which originally cost $40,000 has 6 years of expected life remaining and a current book value of $30,000 versus a current market (salvage) value of 20,000.Target's corporate tax rate is 40%. If Target sells the old machine at market value, what is the initial after tax outlay for the new printing machine?

  • $22,180
  • $30,000
  • $33,600
  • $36,000
  • $40,000

Reference no: EM132595085

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