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Assume that a firm expects to be able to liquidate the new machine, which cost $ 4 0 0 , 0 0 0 , at

Assume that a firm expects to be able to liquidate the new machine, which cost $400,000, at the end of its 5-year usable life to net $42,000 after paying removal and cleanup costs. Had it not been replaced by the new machine, the old machine, which initially cost $240,000 and was used for 3 years before being replaced, would have been liquidated at the end of the 5 years (i.e., the same time the new machine is liquidated) to net $10,000. The firm expects to recover its $17,000 net working capital investment upon termination of the project. The firm pays taxes at a rate of 40%. The firm depreciated both machines using a 5-yr MACR schedule as follows: 20%,32%,19%,12%,12%,5%. Calculating the terminal cash flow for this machine.

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