Tech Engineering Company is considering the purchase of a new machine to replace an existing one. The current market value of the old machine is $14,000 and its book value is $5,000. The new machine's cost is $30,000. If the firm's marginal tax rate is 40%, the initial investment outlay for the new machine is .

$19,600

Explanation:

The computation of the initial investment outlay is shown below:

For computing the initial investment outlay, first we have to calculate the after tax old machine cost that is shown below:

After tax old machine cost = Current Market value of old machine - {(Current Market value of old machine - book value) × tax rate}

= ($14,000 - {($14,000 - $5,000) × 40%}

= ($14,000 - $3,600)

= $10,400

Now the initial investment outlay for the new machine is

= New machine cost - After tax old machine cost

= $30,000 - $10,400

= $19,600

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the answer is "b.the increased supply will create a surplus. "

the essential thought behind price controls is straightforward - utilize the power of law to modify the equilibrium of a market. for instance, the legislature may choose that the steel business needs to survive, and in this way pass a law to set a value floor on steel. this implies all steel sold must offer at or over the floor value, which must be set over the equilibrium cost for it to have any impact. the switch could likewise happen - the administration can choose that steel is excessively costly and set a value roof underneath its equilibrium value, with the goal that all steel must be sold at or beneath that ceiling.