# The net initial investment in the new machine

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

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