The machine was sold for $15,000. J.B.’s marginal tax rate is 40%. What is the amount of the initial outlay?

Question : clanton company is financed 75 percent by equity and 25

The initial outlay for J.B. is the purchase price of the machine, which is $15,000. This amount does not include any taxes that may be due upon purchase or in subsequent years. To calculate the actual amount due at the time of purchase, we must first determine what percentage of J.B.’s marginal tax rate will apply to this transaction and then add this to the purchase price.

J.B.’s marginal tax rate is 40%. For most purchases, only a small portion (usually around 10-20%) of this rate would be applied due to various deductions and exemptions that are available when filing taxes each year; however, since this particular machine has been sold directly from one party to another without an intermediary involved, no such deductions can be taken into account here and therefore the full 40% marginal tax rate applies. We can now calculate how much additional money J.B needs to pay on top of his original cost: 15000 x 0.40 = 6000

Therefore, J. B.’s total initial outlay for purchasing this machine is $21000 ($15000 + $6000).