able 8.5
Cuda Marine Engines, Inc. must develop the relevant cash flows for a replacement capitalinvestment proposal. The proposed asset costs $50,000 and has installation costs of $3,000.The asset will be depreciated using a five-year recovery schedule. The existing equipment,which originally cost $25,000 and will be sold for $10,000, has been depreciated using anMACRS five-year recovery schedule and three years of depreciation has already been taken.The new equipment is expected to result in incremental before-tax net profits of $15,000 peryear. The firm has a 40 percent tax rate.The tax effect on the sale of the existing asset results in ________. (See Table 8.5)
AnswerSelected Answer:
$1,100 tax liability.


Question 17
4 out of 4 points
Table 8.5
Cuda Marine Engines, Inc. must develop the relevant cash flows for a replacement capitalinvestment proposal. The proposed asset costs $50,000 and has installation costs of $3,000.The asset will be depreciated using a five-year recovery schedule. The existing equipment,which originally cost $25,000 and will be sold for $10,000, has been depreciated using anMACRS five-year recovery schedule and three years of depreciation has already been taken.The new equipment is expected to result in incremental before-tax net profits of $15,000 peryear. The firm has a 40 percent tax rate.The initial outlay equals ________. (See Table 8.5)
AnswerSelected Answer:
$44,100
 Question 18
4 out of 4 points
Table 8.5
Cuda Marine Engines, Inc. must develop the relevant cash flows for a replacement capitalinvestment proposal. The proposed asset costs $50,000 and has installation costs of $3,000.The asset will be depreciated using a five-year recovery schedule. The existing equipment,which originally cost $25,000 and will be sold for $10,000, has been depreciated using anMACRS five-year recovery schedule and three years of