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    The net initial investment in the new machine

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    A company purchased a machine for $100,000 four years ago. It was being depreciated on a straight-line basis over five years. The company decides to replace this machine today with a more productive machine that costs $125,000. The old machine can be sold today for $25,000. The income tax rate is 40%. The net initial investment in the new machine is

    $125,000
    $100,000
    $105,000
    $102,000

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    https://brainmass.com/economics/income-distribution/the-net-initial-investment-in-the-new-machine-158834

    Solution Preview

    The net initial investment in the new machine is

    Investment in new machine - Salvage value +/- Tax adjustment
    125000-25000+( 40% on ...

    Solution Summary

    The net initial investment in the new machine is given.

    $2.19