Felix Industries Purchased a Grinder 5 Years Ago for $15,000

question 79

Multiple Choice

Felix Industries purchased a grinder 5 years ago for $15,000. It is being depreciated on a straight-line basis over 15 years to an estimated salvage value of zero. It could be sold now for $6,000. The firm is considering selling it and purchasing a new one. The new grinder would cost $25,000 installed and would be depreciated on a straight-line basis over 10 years to a zero estimated salvage value. The company's marginal tax rate is 40%. Determine the net investment if the old grinder is sold and the new one purchased.

• A) $19,000
• B) $16,600
• C) $17,400
• D) cannot be computed

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Definitions:

Business Strategy

A plan of action designed to achieve a long-term or overall aim within the competitive setting of an organization.

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A car rental company that offers vehicle rental services to consumers and businesses, known for its extensive network and emphasis on customer service.

Management Goals

The objectives or targets that management aims to achieve to fulfill the organization's mission and vision.

Goal Clarity

The degree to which the objectives or targets to be achieved are clearly defined, understood, and measurable, contributing to effective planning and execution.