Question: Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its

Builtrite is considering purchasing a new machine that would cost $60,000 and

Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its five year life. At the end of five years it is believed that the machine could be sold for $15,000. The current machine being used was purchased 2 years ago at a cost of $50,000 and it is being depreciated down to zero over its 5 year life. The current machine's salvage value now is $20,000. The new machine would increase EBDT by $42,000 annually and would require an additional $3000 in inventory. Builtrite's marginal tax rate is 34% What is the Initial Investment associated with the purchase of this machine? O$38,640 O $36,600 O $34,600 O $39,600

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

You are working for an organisation called Future Enterprises Ltd which has over recent years, grown its market both nationally and internationally. It now wishes to promote the right person from...

Nine experts rated two brands of coffee in a taste-testing experiment. A rating on a 7-point scale (1 = extremely unpleasing, 7 = extremely pleasing) is given for each of four characteristics: taste,...

1. prepare a scheldule of cash reciepts for july august and september. 2. prepare a cash budget for july august and september. please explain each step so i understand how you got to each answer. i...

Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its five year life. At the end of five years it is...

4) Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its five year life. At the end of five years it is...

Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its five year life. At the end of four years it is...

Question 4 2 pts Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its five year life. At the end of five...

Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its five year life. At the end of five years it is...

Question 4 2 pts Builtrite is considering purchasing a new machine that would cost $50,000 and the machine would be depreciated (straight line) down to $0 over its five year life. At the end of five...

Apply Chebychevs Theorem to the data for Alaska using k = 2. a. Subtract two standard deviations from the mean. b. Add two standard deviations to the mean. c. Apply Chebychevs Theorem for k = 2 and...

The following ANOVA table is based on the data discussed in Problem 5 of Chapter 8. Use Î± = .05. a. Provide a test to compare the following two models: Y = Î²0 +...

1 2 ) Paul Pfennig, MBA, CFA, runs a hedge fund specializing in identifying securities which are mispriced relative to the CAPM. Paul's research team has provided information about two potential...

ONeil, Inc. began work on a $7,000,000 contract in 2010 to construct an office building. ONeil uses the percentage-of-completion method. At December 31, 2010, the balances in certain accounts were:...

Turner, Inc. began work on a $7,000,000 contract in 2010 to construct an office building. During 2010, Turner, Inc. incurred costs of $1,700,000, billed their customers for $1,200,000, and collected...

Archer Construction Company began work on a $420,000 construction contract in 2012. During 2012, Archer incurred costs of $278,000, billed its customer for $215,000, and collected $175,000. At...

Job costing, unit cost, ending work in process. Raymond Company produces pipes for concert- quality organs. Each job is unique. In April 2009, it completed all outstanding orders, and then, in May...

Use the information in Exercise 5-6A to complete the following requirements. Assume that before shifting to activity-based costing, Roebuck Industries allocated all overhead costs based on direct...

Determine if the overhead allocated to the product relates to a single plantwide overhead rate method, multiple production department factory overhead rate method, or activity-based costing...

Measles revisited. The analyst in Exercise 17 finds a 98% confidence interval for the true proportion of vaccinated children to be (0.9707, 0.9773). a) Explain why she can reject the null hypothesis...

Loans. Before lending someone money, banks must decide whether they believe the applicant will repay the loan. One strategy used is a point system. Loan officers assess information about the...

Computer skills again. The health care analyst in Exercise 18 finds a 90% confidence interval for the true proportion of employees who fail the course to be (14.46%, 15.74%). a) Explain why she can...