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Initial investment -Basic calculation Cushing Corporation is considering the purchase of a new grading machine to replace the existing one. The existing machine was purchased 3 years ago at an installed cost of $20,000 ; it was being depreciated under MACRS using a 5-year recovery period. (See table LOADING... for the applicable depreciation percentages.) The existing machine is expected to have a usable life of at least 5 more years. The new machine costs $36,000 and requires $4,500 in installation costs; it will be depreciated using a 5-year recovery period under MACRS. The existing machine can currently be sold for $25,600 without incurring any removal or cleanup costs. The firm is subject to a 40% tax rate. Calculate the initial investment associated with the proposed purchase of a new grading machine.
Sagot :
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