Shunt Technology will spend $800,000 on a piece of equipment that will  manufacture fine wire for the electronics industries. The shipping and installation  charges will be $240,000 and net working capital will increase $48,000. The equipment will replace an existing machine that has a salvage value of $75,000  and a book value of $125,000. If Shunt has a current marginal tax rate  of 34 percent, what is the net investment?

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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  1. Shunt Technology will spend $800,000 on a piece of equipment that will 

manufacture fine wire for the electronics industries. The shipping and installation 

charges will be $240,000 and net working capital will increase $48,000.
The equipment will replace an existing machine that has a salvage value of $75,000

 and a book value of $125,000. If Shunt has a current marginal tax rate 

of 34 percent, what is the net investment?                                                       

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