Initial investment$$Basic calculation Cushing Corporation is considering the pur$-$

chase of a new grading machine to replace the existing one. The existing machine

was purchased $3$ years ago at an installed cost of $$20,000$; it was being depreciated

under MACRS using a $5-$year recovery period. $($See Table $4\mathrm{.}2$ on page $117$ for the

applicable depreciation percentages.$)$ The existing machine is expected to have a

usable life of at least $5$ more years. The new machine costs $$35,000$ and requires

$$5,000$ in installation costs; it will be depreciated using a $5-$year recovery period

under MACRS. The existing machine can currently be sold for $$25,000$ without

incurring any removal or cleanup costs. The firm is subject to a $40\%$ tax rate.

Calculate the initial investment associated with the proposed purchase of a new

grading machine.