A Moving to another question will save this response.Question 14A project to replace an old machine with a new one is under consideration. The new machine costs $1500 and requires an additional working ca$750 salvage value. Calculate the Initial Outlay of this replacement project assuming the book value of the old asset is $1500. The firm's marginaO $1,912.50O $337.50O $1,837.50O $1,087.50O None of the listed choices is correctA Moving to another question will save this response.MacBook Airsc88 FAF1F2F3F5F6@#$&3.4567QWTYSDCVoptioncommand Question 14 of 17 >6 pointsSave Answernsideration. The new machine costs $1500 and requires an additional working capital investment of $750. The old machine is expected to have aent project assuming the book value of the old asset is $1500. The firm's marginal tax rate is 55%.« < Question 14 of 17 > »Close WindowMacBook AirF4トトF6F9F12F7F8F10F11&*+589{Y1Kвcommandoption.. ..

Marginal tax rate 55% Book value of old asset 1500 Salvage value of old machine 750 Loss on…

sideration. The new machine costs $1500 and requires an additional working capital investment of $750. The old machine is expected to have a ent project assuming the book value of the old asset is $1500. The firm's marginal tax rate is 55%.

sideration. The new machine costs $1500 and requires an additional working capital investment of $750. The old machine is expected to have a ent project assuming the book value of the old asset is $1500. The firm's marginal tax rate is 55%.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Slithering Snakes is considering adding a new product line that is expected to increase annual sales by $355,000 and cash expenses by $277,000. The Initial investment will require $385,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the five-year life of the project. The company has a marginal tax rate of 21 percent. What is the annual value of the depreciation tax shield. Multiple Choice $77,000 $15,223 $16,170 $19,260 $18,180
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1
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llana Industries, Inc., needs a new lathe. It can buy a new high-speed lathe for $0.97 million. The lathe will cost $31,300 to run, will save the firm $127,700 in labour costs, and will be useful for 10 years. Suppose that for tax purposes, the lathe will be in an asset class with a CCA rate of 25%. llana has many other assets in this asset class. The lathe is expected to have a 10-year life with a salvage value of $91,000. The actual market value of the lathe at that time will also be $91,000. The discount rate is 15% and the corporate tax rate is 35%. What is the NPV of buying the new lathe? (Round your answer to the nearest cent.) NPV $
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