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Author Question: AFB, Inc is considering replacing an old machine with a new one. Two months ago their chief ... (Read 511 times)

kshipps

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  • Posts: 571
on: Jul 10, 2018
AFB, Inc is considering replacing an old machine with a new one. Two months ago their chief
  engineer completed a training seminar on the new machine's operation and efficiency. The 3,000
  cost for this training session has already been paid.
 
  If the new machine is purchased, it would
  require 7,000 in installation and modification costs to make it suitable for operation in the factory.
  The old machine originally cost 80,000 five years ago and is being depreciated by 10,000 per year.
  The new machine will cost 100,000 before installation and modification. It will be depreciated by
  12,000 per year. The old machine can be sold today for 12,000. The marginal tax rate for the firm
  is 40. Compute the relevant initial outlay in this capital budgeting decision.
  A) 97,800 B) 90,800 C) 79,500 D) 87,800

Question 2

Preferred stockholders' rights come before those of bondholders.
 
  Indicate whether the statement is true or false
Foundations of Finance ¦ Keown, Petty, Martin ¦ 9th Edition
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cdmart10

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  • Posts: 332
Reply #1 on: Jul 10, 2018
Answer to Question 1

D

Answer to Question 2

FALSE


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