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    After-tax outlay

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    The Target Copy Company is contemplating the replacement of its old printing machine with a new model costing $60,000. The old machine, which originally cost $40,000, has 6 years of expected life remaining and a current book value of $30,000 versus a current market value of $24,000. Target's corporate tax rate is 40 percent. If Target sells the old machine at market value, what is the initial after-tax outlay for the new printing machine?

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    Solution Preview

    The initial outlay is the cost of current machine less the after tax cash received from the sale of old ...

    Solution Summary

    The solution explains how to calculate the initial after-tax outlay for the new project.