Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would...
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Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its five year life. At the end of five years it is believed that the machine could be sold for $15,000. The current machine being used was purchased 3 years ago at a cost of $40,000 and it is being depreciated down to zero over its 5 year life. The current machine's salvage value now is $12,000. Also, a higher level of inventory would be needed in the amount of $4000 for the new machine. The new machine would increase EBDT by $48,000 annually. Builtrites marginal tax rate is 34%
What is the initial investment associated with the purchase of this machine?
$49,360
$53,360
$52,000
$50,640
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