Session 20 Solutions - Example Wharton Publishing needs to...

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ExampleWharton Publishing needs to either overhaul or replace its drill press. The following information is available:Wharton’s income tax rate is 35%. And, its objective is to earn a return of 20%. 20,0005,000Expected Salvage value in 5 years20,0005,000Actual Salvage value in 5 years20,000Current salvage value40,00070,000Annual cash operating cost40,000Cost of overhaul30,000Current book value$100,000$80,000Purchase price, newNew MachineOld Machine

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