Margo IncWants to Replace a 9-Year-Old Machine with a New Machine

question 50

Multiple Choice

Margo Inc.wants to replace a 9-year-old machine with a new machine that is more efficient.The old machine cost $70,000 when new and has a current book value of $15,000.Margo can sell the machine to a foreign buyer for $14,000.Margo's tax rate is 35%.The effect of the sale of the old machine on the initial outlay for the new machine is

• A) ($14,350).
• B) ($13,650).
• C) ($9,100).
• D) $1,000

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