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A firm has decided to replace an existing asset with a newer Model. The existing asset originally cost $30,000 . The current book value of the existing asset for tax purposes is $ 14,400. The existing asset can be sold for $ 25,000. The new asset will cost $ 75,000. If the assumed tax rate is 40 % on ordinary income and capital gains, the initial investment is ________

A. $ 42,000

B. $ 52,440

C. $ 54,240

D. $ 50,000

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91608286

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