Question: Stroms Drive-In is considering replacing its old projector with a new one. The old projector was being depreciated using MACRS (5 year class). Original installed

Stroms Drive-In is considering replacing its old projector with a new one. The old projector was being depreciated using MACRS (5 year class). Original installed cost was $10,000 four years ago and it can now be sold for $2,000. The new projector will cost $18,000 and will be depreciated using MACRS (5 year class). Reduced expenses of $5,000 per year will result because of decreased labor cost to run the projector. The firm is in the 21% tax bracket. What is the initial capital spending for the new projector (year 0)?

(Use negative for cash outflow. Round to the nearest dollar and do not enter a dollar sign)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

1.K&M Winery has an old wine press that the company wants to replace with a more efficient press. The new press costs $110,000 with an additional $10,000 in installation costs. The old press was...

Q:

Stroms Drive-In is considering replacing its old projector with a new one. The old projector was being depreciated using MACRS (5 year class). Original installed cost was $10,000 four years ago and...

Q:

Stroms Drive-In is considering replacing its old projector with a new one. The old projector was being depreciated using MACRS (5 year class). Original installed cost was $10,000 four years ago and...

Q:

Stroms Drive-In is considering replacing its old projector with a new one. The old projector was being depreciated using MACRS (5 year class). Original installed cost was $10,000 four years ago and...

Q:

Stroms Drive-In is considering replacing its old projector with a new one. The old projector was being depreciated using MACRS (5 year class). Original installed cost was $10,000 four years ago and...

Q:

Stroms Drive-In is considering replacing its old projector with a new one. The old projector was being depreciated using MACRS (5 year class). Original installed cost was $10,000 four years ago and...

Q:

Strom??s Drive-In is considering replacing its old projector witha new one. The old projector was being depreciated using MACRS (5year class). Original installed cost was $10,000 four years ago and 2...

Q:

Raphael Restaurant is considering the purchase of a $9,300 souffl maker. The souffl maker has an economic life of four years and will be fully depreciated by the straight-line method. The machine...

Q:

Problem 1 A company is considering replacing an old machine with a new one. The old machine is completely depreciated and can be sold for $50,000 in the market. The company intends to sell this...

Q:

Mass Co. has a beta of 1.20. The firm currently has 30% debt, but is considering changing its capital structure to be 20% debt and 80% equity. If its corporate tax rate is 40%, what is its levered...

Q:

A Pelton wheel has mean bucket speed of 128m/s and is supplied with water at a rate of 750 litres/sec under a head of 35 m. If the bucket deflects the jet through an angle of 160 o , find the horse...

Q:

The debt covenants in TCBYs loan agreement do not mention explicitly the accounting methods the company must use when it prepares financial statements for submission to the lender. Required: Why dont...

Q:

Question 1 1 of 1 1 - 1 5 ; ShetheldCorporation purchased the net assets of Sheridan Corporation on January 2 , 2 0 2 0 for $ 6 6 0 , 8 0 0 and 1 lio paid $ 2 3 , 6 0 0 in direct acqualition costs....

Q:

On 1 March 2007 DB Limited issued R560 000 15% debentures at R98. The debentures were to be redeemed at par in four equal annual payments starting 28 February 2010. Required: Journalise the above...