▪ XYZ Corporation is considering the purchase of a new machine for $250,000, which will be depreciated on a straight-line basis over 5 years with no salvage value. In order to put this machine in operating order, it is necessary to pay installation charges of $50,000. The new machine will replace an existing machine, purchased 3 years ago at a cost of $240,000,that is depreciated on a straight-line basis (with no salvage value) over its 8-year life (i.e., $30,000 per year depreciation). The old machine can be sold for $255,000 to a scrap dealer. The company is in the 34 percent tax bracket. The machine will require an increase in w/p inventory of $5,000.
