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 five-year

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 $40,000 and it is being depreciated down to zero over its 5-year life. The current machine's salvage value now is $18,000. Also, a higher level of inventory would be needed in the amount of $4000 for the new machine. The new machine would increase EBDT by $48,000 annually. Builtrite's marginal tax rate is 34%. What is the Initial Investment associated with the purchase of this machine?

O $43,960

O $53,360

O $48,040

$50,640

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