ssuming a 20% tax rate, calculete the initial investment associated with the replacement project.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 10P
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lMiller Dental, Inc., is considering replacing its existing laser checking system, which was purchased 3 years ago at a cost of $568,000. The laser checking can be sold today for a lump sum of $253,000. It is being depreciated using MACRS and a 5-year recovery period (see  MACRS table at the end of slides for depreciaition rates). A new laser checking system will cost $870,000 to purchase and install. Replacement of the planned laser checking system would not involve any change in net working capital. Assuming a 20% tax rate, calculete the initial investment associated with the replacement project.

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