Flem company considering replacing a filling line at oklahoma.The existing line was purchased several years ago 600,000.The line book value is 200,000, and flem managament feels that could be sold at this time for $150,000.A new increased capcity line can be purchased for 1,200,000.Delivery/installation of new line are expected to cost additional $100,000. Assuming fem marginal tax rate 40% calculate the net investment for new line.

To calculate the net investment for the new line, we need to consider the following costs:

1. Cost of the new filling line: $1,200,000
2. Delivery/installation cost: $100,000

To determine the net investment, we need to subtract any proceeds from selling the old line, as well as any tax savings from disposing of the old line.

Proceeds from selling the old line:
Sale value: $150,000

Tax savings from disposing of the old line:
Book value: $200,000
Tax rate: 40%

Tax savings = Book value * Tax rate
Tax savings = $200,000 * 40% = $80,000

Net investment = (Cost of new line + Delivery/installation cost) - (Sale value of old line - Tax savings)
Net investment = ($1,200,000 + $100,000) - ($150,000 - $80,000)
Net investment = $1,300,000 - $70,000
Net investment = $1,230,000

Therefore, the net investment for the new filling line would be $1,230,000.

To calculate the net investment for the new line, we need to consider the cost of the new line, delivery/installation costs, and the proceeds from the sale of the existing line.

First, let's calculate the net cost of the new line:
New line cost = $1,200,000
Delivery/installation cost = $100,000
Total cost of new line = $1,200,000 + $100,000 = $1,300,000

Next, let's calculate the proceeds from the sale of the existing line:
Book value of existing line = $200,000
Selling price of existing line = $150,000

Now, we need to determine the taxable gain on the sale of the existing line. The taxable gain is the difference between the selling price and the book value:
Taxable gain = Selling price - Book value = $150,000 - $200,000 = -$50,000 (negative because the selling price is less than the book value)

Since the taxable gain is negative, there is no taxable gain on the sale of the existing line, meaning we do not need to take the marginal tax rate into consideration for this calculation.

Lastly, to calculate the net investment, we subtract the proceeds from the sale of the existing line from the total cost of the new line:
Net investment = Total cost of new line - Proceeds from sale of existing line = $1,300,000 - $150,000 = $1,150,000

Therefore, the net investment for the new line is $1,150,000.