Firm X Is Considering the Replacement of an Old Machine

question 62

Multiple Choice

Firm X is considering the replacement of an old machine with one that has a purchase price of $70,000. The current market value of the old machine is $18,000 but the book value is $32,000. The firm's tax rate for ordinary income is 30%. What is the net cash outflow for the new machine after considering the sale of the old machine? Disregard the effect of depreciation of the new machine if acquired.

• A)$47,800
• B)$38,000
• C)$45,000
• D)$40,100

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Definitions:

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A condition characterized by excessive body fat accumulation, which poses health risks.

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A disorder in children characterized by severe difficulties in forming emotional attachments to others, resulting from early neglect or abuse.

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