11-12 Initial investment: Basic calculation Sony Pacific Music Corporation is considering the purchase of a new sound board used in recording studios. mprove its sound effect. The existing sound board was purchased 3 years ago at an installed cost of $23,500; it was being depreciated under MACRS u 5-year recovery period. (See Table 4.2 on page 166 for the applicable depreciation percentages.) The existing sound board is ex- pected to have a usal fe of at least 4 more years. The new sound board costs $38,800 and requires $5,400 in installation costs; it will be depreciated using a 5-year recovery eriod under MACRS. The existing machine can currently be sold for $27,300 without including any removal or cleanup costs. The firm is subject to a 20 ate. Calculate the initial investment associated with the proposed purchase of a new sound board.
11-12 Initial investment: Basic calculation Sony Pacific Music Corporation is considering the purchase of a new sound board used in recording studios. mprove its sound effect. The existing sound board was purchased 3 years ago at an installed cost of $23,500; it was being depreciated under MACRS u 5-year recovery period. (See Table 4.2 on page 166 for the applicable depreciation percentages.) The existing sound board is ex- pected to have a usal fe of at least 4 more years. The new sound board costs $38,800 and requires $5,400 in installation costs; it will be depreciated using a 5-year recovery eriod under MACRS. The existing machine can currently be sold for $27,300 without including any removal or cleanup costs. The firm is subject to a 20 ate. Calculate the initial investment associated with the proposed purchase of a new sound board.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:P11-12 Initial investment: Basic calculation Sony Pacific Music Corporation is considering the purchase of a new sound board used in recording studios to
improve its sound effect. The existing sound board was purchased 3 years ago at an installed cost of $23,500; it was being depreciated under MACRS using
a 5-year recovery period. (See Table 4.2 on page 166 for the applicable depreciation percentages.) The existing sound board is ex- pected to have a usable
life of at least 4 more years. The new sound board costs $38,800 and requires $5,400 in installation costs; it will be depreciated using a 5-year recovery
period under MACRS. The existing machine can currently be sold for $27,300 without including any removal or cleanup costs. The firm is subject to a 20% tax
rate. Calculate the initial investment associated with the proposed purchase of a new sound board.
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