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borteleto borteleto
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5 years ago
QRW Corp. needs to replace an old lathe with a new, more efficient model. The old lathe was purchased for $50,000 nine years ago and has a current book value of $5,000. (The old machine is being depreciated on a straight-line basis over a ten-year useful life.) The new lathe costs $100,000. It will cost the company $10,000 to get the new lathe to the factory and get it installed. The old machine will be sold as scrap metal for $2,000. The new machine is also being depreciated on a straight-line basis over ten years. Sales are expected to increase by $8,000 per year while operating expenses are expected to decrease by $12,000 per year. QRW's marginal tax rate is 40%. Additional working capital of $3,000 is required to maintain the new machine and higher sales level. The initial outlay for the new machine is
A) $113,000.
B) $112,200.
C) $111,000.
D) $109,800.
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Foundations of Finance

Foundations of Finance


Edition: 9th
Authors:
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Marc18Marc18
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borteleto Author
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5 years ago
Above and beyond my expectations for this site
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