What is the total initial cash flow for replacement decision


Problem

Colcord Industries is replacing an old mixing machine. The old machine has been fully depreciated, but Colcord finds someone willing to buy it for $2,713. The new machine costs $35,000 and will be straight line depreciated over its 7-year life. The new machine will also immediately increase inventory by $800. Colcord's tax rate is 30%. What is the total initial (t=0) cash flow for the replacement decision?

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Finance Basics: What is the total initial cash flow for replacement decision
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