Spencers Majestic Foods is considering the replacement of some old equipment. The new equipment will cost $300,000 including delivery and installation. The old equipment to be replaced has a book value of $100,000 and can be sold pre-tax for $120,000. If the firm's effective tax rate is 40%, compute the net investment.
A)$192,000
B)$188,000
C)$180,000
D)$228,000

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The Answer of Spencers Majestic Foods is considering the replacement of some old equipment. The new equipment will cost $300,000 including delivery and installation. The old equipment to be replaced has a book value of $100,000 and can be sold pre-tax for $120,000. If the firm's effective tax rate is 40%, compute the net investment.
A)$192,000
B)$188,000
C)$180,000
D)$228,000

Spencers Majestic Foods Is Considering the Replacement of Some Old