Replacement investment net initial after-tax cash outlay

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Reference no: EM131606025

In a replacement investment, new equipment will cost $100,000 and sales tax paid on new equipment (to be capitalized) is 7% of the purchase price. Old equipment that would be replaced can be sold currently for $40,000, and carries accumulated depreciation of $25,000. The original cost of the old equipment is $70,000. The firm considering this replacement is a 40% taxpayer. What is the replacement investment's net initial after-tax cash outlay?

Reference no: EM131606025

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