Replace old equipment with new and updated model

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Reference no: EM131084416

Amazing Ventures Inc. a manufacturer of computer components is trying to determine the initial investment required to replace an old equipment with a new and updated model. The cost of the new machine is $$222,000 and they have determined that it will cost approximately $22,000 to install this new equipment. Three years ago, they purchased the current machine they are looking to replace at a cost of $122,000. They have found a buyer for the current machine who is willing to pay $160,000. The corporation’s current tax rate is 40% and they have determined that they will have a $19,000 increase in current assets and a $9,000 increase in current liabilities and this will result in a $10,000 increase in net working capital. After some research, they have also determined that the book value of the current machine they have owned for three years are 14%, 19% and 11%, respectively. Calculate the initial investment for Amazing Ventures Inc.

Reference no: EM131084416

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