Calculate the initial investment associated with proposed

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Reference no: EM131551526

Cushing Corporation is considering the purchase of a new grading machine to replace the existing one. The existing machine was purchased 4 years ago at an installed cost of $20,000; it was being depreciated under MACRS using a 5 year recoery period (20% year one, 32% year two, 19% year three, 12% years four and five, 5% year six). The existing machine is expected to have a usable life of at least 5 more years. The new machine costs $35,500 and requires $5,000 in installation sots; it will be depreciated using a 5-year recovery period under MACRS. The existing machine can currently be sold for $25,200 without incurring any removal or cleanup costs. The firm is subject to a 40% tax rate. Calculate the initial investment associated with the proposed purchase of a new agrading machine in dollars.

Reference no: EM131551526

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