show steps please A company is evaluating the possible replacement of equipment.

Question

show steps please

A company is evaluating the possible replacement of equipment. New equipment would cost $106,975, and sales tax on the purchase would be 3%. Both the purchase price and sales tax would be capitalized. The old equipment had an original purchase price of $70,000 and accumulated depreciation of $32,000 has been taken. The old equipment can be sold currently for $27,148, and the company pays taxes at a rate of 37%. What is the initial cash outlay necessary to replace the existing equipment? Round your answer to the nearest whole dollar

Explanation / Answer

Calculation of Initial Cash Outlay:

Amount($) Amount($) New Equipment Cost 106,975 + Sales Tax on Purchase(3%) 3,209.25 Total Cost 110,184.25 Less: Cash from Sale of Old Equipment 27,148 - Tax (@37%) 10,044.76 Net Cash Received 17,103.24 Initial Outlay Required 93,082

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.