### What is the initial investment

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Starbucks corporation has decided to replace an existing asset with a newer model. The new asset will cost \$70,000. The original asset, when purchased cost \$10,000, was being depreciated under a straight line methodology, using a five-year recovery period, and has been depreciated for four full years. The existing asset can be sold for \$8,000. If the assumed tax rate is 40 percent on ordinary income and capital gains, what is the initial investment?

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