Chap 10 QUESTION 4 1

Urgent help please .

The previous question has been slightly modified. Note the difference in the book value of the old machine. The Renecke Co. is planning to replace their printing equipment with a new computerized version that will print more copies at lower cost. The cost of the new machine will be $600,000 including installation. The old machine has a book value of $150,000 that is being depreciated straight-line to a zero value over five years. It can be sold currently for $100,000. The new machine will require net working capital of $80,000 in period 0. What initial outlaywill be required in period 0 for this new equipment? Assume a tax rate of 35%

. -$437,500

-$562,500

-$482,500

-$465000