Ibm is replacing a old assembly line that cost 95000 give, Ask an Expert

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IBM is replacing a old assembly line that cost $95,000 give years ago with a new more efficient machine that will cost $230,000. Shipping and installation will cost an additional $20,000. The old machine has a book value of $15,000 but will be sold as scrap for $5,000. The new machine will be depreciated with a 7 year life under MACRS guideline. With the increase production, inventories will increase $4,000, accounts receivable will increase $16,000 an accounts payable will increase $14,000. With a marginal tax rate of 40% what is the net investment?

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Financial Management, Finance

Category:- Financial Management
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