Software tech inc. is planning to buy a new machine and replacing an old machine. Old machine was purchased 10 years ago and is fully depreciated but it can still be used for the next 5 years. accounts receivable will increase by $2000 inventory will increase by $2500 and accounts payable will increase by $4000 if software tech purchases new machine. This new machine will cost $120,000 and installation will be $2000. The machine will be depreciated using the macrs something. old machine can be sold for $3000 today. new machine will require training and it will cost software tech another $3000. the firm is in 35% tax bracket. 

What is the initial investment today? Show your calculations.

Answer rating: 100% (QA)

To calculate the initial investment we need to consider the costs and changes in working capital ass... View the full answer