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Table 11.5 Nuff Folding Box Company, Inc. Is Considering Purchasing a New

question 39

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Table 11.5
Nuff Folding Box Company, Inc. is considering purchasing a new gluing machine. The gluing machine costs $50,000 and requires installation costs of $2,500. This outlay would be partially offset by the sale of an existing gluer. The existing gluer originally cost $10,000 and is four years old. It is being depreciated under MACRS using a five-year recovery schedule and can currently be sold for $15,000. The existing gluer has a remaining useful life of five years. If held until year 5, the existing machine's market value would be zero. Over its five-year life, the new machine should reduce operating costs (excluding depreciation) by $17,000 per year. Training costs of employees who will operate the new machine will be a one-time cost of $5,000 which should be included in the initial outlay. The new machine will be depreciated under MACRS using a five-year recovery period. The firm has a 12 percent cost of capital and a 40 percent tax on ordinary income and capital gains.
-The initial outlay for this project is ________. (See Table 11.5)

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Carboxylic Acid

Organic compounds characterized by a carboxyl group (-COOH), known for their acidic properties and widespread occurrence in biochemistry and industrial chemistry.

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A compound containing carbon atoms that has been formed as a result of an organic reaction.

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Detailed descriptions of the steps involved in a chemical reaction or process, showing how reactants are transformed into products.

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