A New Tire Balancing Machine Is Available to Replace an Existing

question 22

Multiple Choice

A new tire balancing machine is available to replace an existing one.The new one will cost $5,092.The old one originally cost $2,594 and was being depreciated over its 3-year life using MACRS.Two years have passed since the old one was purchased.Shipping of the new machine will cost $320.Assume a 40% tax rate.What is the net initial cash flow? Assume the old machine cannot be sold.(Round answer to nearest dollar.)
MACRS Depreciation Rates

• A) $5,258
• B) -$5,258
• C) -$5,412
• D) $5,181
• E) -$5,181

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Definitions:

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Martin Seligman

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