[5] Garrison Corporation is considering the replacement of an old machine that is currently being used. The old machine has a book value of $28,000. If Garrison decides to replace the old machine, Picco Company has offered to purchase it for $60,000 on the replacement date. Garrison has a tax rate of 40%. What is the after-tax cash flow associated with the salvage of the old machine?
[5] Garrison Corporation is considering the replacement of an old machine that is currently being used. The old machine has a book value of $28,000. If Garrison decides to replace the old machine, Picco Company has offered to purchase it for $60,000 on the replacement date. Garrison has a tax rate of 40%. What is the after-tax cash flow associated with the salvage of the old machine?
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 9P
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Question
![[5] Garrison Corporation is considering the replacement of an old machine that is currently being
used. The old machine has a book value of $28,000. If Garrison decides to replace the old machine,
Picco Company has offered to purchase it for $60,000 on the replacement date.
Garrison has a tax rate of 40%. What is the after-tax cash flow associated with the salvage of
the old machine?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F07be42a1-4870-4a19-ae96-6457a6e512e1%2F1165a5db-a549-4323-93bb-38133aa17ff6%2Fle8bp75_processed.png&w=3840&q=75)
Transcribed Image Text:[5] Garrison Corporation is considering the replacement of an old machine that is currently being
used. The old machine has a book value of $28,000. If Garrison decides to replace the old machine,
Picco Company has offered to purchase it for $60,000 on the replacement date.
Garrison has a tax rate of 40%. What is the after-tax cash flow associated with the salvage of
the old machine?
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