A $85,000 machine with a 9-year class life was purchased 3 years ago. The machine will now be sold for $27,000 and replaced with a new machine costing $54,000, with a 5-year class life. The new machine will not increase sales, but will decrease operating costs by $16,000 per year. Simplified straight line depreciation is employed for both machines, and the marginal corporate tax rate is 34 percent. What is the initial outlay for the project?  NOTE -- ALTHOUGH THE INITIAL OUTLAY IS NEGATIVE, PLEASE ENTER YOUR ANSWER AS A POSITIVE SIGN.  IN OTHER WORDS, IF YOUR ANSWER IS -10,000, ENTER IT AS 10,000.  DO NOT ENTER THE DOLLEAR SIGN.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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A $85,000 machine with a 9-year class life was purchased 3 years ago. The machine will now be sold for $27,000 and replaced with a new machine costing $54,000, with a 5-year class life. The new machine will not increase sales, but will decrease operating costs by $16,000 per year. Simplified straight line depreciation is employed for both machines, and the marginal corporate tax rate is 34 percent. What is the initial outlay for the project?  NOTE -- ALTHOUGH THE INITIAL OUTLAY IS NEGATIVE, PLEASE ENTER YOUR ANSWER AS A POSITIVE SIGN.  IN OTHER WORDS, IF YOUR ANSWER IS -10,000, ENTER IT AS 10,000.  DO NOT ENTER THE DOLLEAR SIGN.

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