Question: CAPITAL BUDGETING EXERCISE: REPLACEMENT izi computer purchased 2 yrs ago for $120,000 depreciation using 5-yr MACRS resale value of $37,600 cost of new computer

CAPITAL BUDGETING EXERCISE: REPLACEMENT izi computer purchased 2 yrs ago for $120,000

CAPITAL BUDGETING EXERCISE: REPLACEMENT izi computer purchased 2 yrs ago for $120,000 depreciation using 5-yr MACRS resale value of $37,600 cost of new computer is $180,000 subject to 5-yr MACRS new computer will provide additional cost savings and benefits of $42,000 for the next 6 yrs = EBITDA 35% tax rate 10% cost of capital

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