Financial Control Question

Jan 8th, 2014
Anonymous
Category:
Business Finance
Price: $15 USD

Question description


the management of svm company plans to replace a sorting machine thay was accquired several years ago at cost of $60000. The machine has been depreciated to its residual value of $10,000. A new sorter can be purchased for $96,000. The dealer will grant a trade-in allowance of $16,000 on the old machine . If a new machine is not purchased , SVM company. Will spend $10,00 to repair the old machine .Gains and losses on trade-in transactions are not subject to income taxes . The cost to repair the old machine can be deducted in computing income taxes . Income taxes are estimated at 40% of the income subject to tax . Additional working capital required is $50,000 . Compute the intial investment in this project

 

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