The Target Copy Company Is Contemplating the Replacement of Its

question 44

Multiple Choice

The Target Copy Company is contemplating the replacement of its old printing machine with a new model costing $60,000. The old machine, which originally cost $40,000, has 6 years of expected life remaining and a current book value of $30,000 versus a current market value of $24,000. Target's corporate tax rate is 40 percent. If Target sells the old machine at market value, what is the initial after-tax outlay for the new printing machine?

• A) -$22,180
• B) -$30,000
• C) -$33,600
• D) -$36,000
• E) -$40,000

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Definitions:

Governmental Purchases

Expenditures made by the government for goods and services that are directly used to provide public services or for government consumption.

Domestic Output

The complete total of the value of all outputs and services fashioned within a nation's borders across a defined time span.

Tax-Freedom Day

A concept depicting the day of the year by which an average citizen has earned enough income to pay off their annual tax obligations to the government.

Tax Bills

Statements of money owed to the government as a result of taxation.