A $250,000 machine with a 15-year class life was purchased 3 years ago and has a current salvage value of $175,000. The machine will now be replaced with a new machine costing $225,000 with a 12-year class life. The new machine will not increase sales but will decrease operating costs by $26,000 per year. Simplified straight line depreciation is employed for both machines, and the marginal corporate tax rate is 21 percent.
What is the initial outlay for the project?
a) $30,650
b) $44,750
c) $22,915
d) $15,890
e) $39,635