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Can someone help? erminal cash flow-Replacement decision Russell Industries is considering replacing a fully depreciated machine that has a remaining useful iffe of 10 years
Can someone help?
erminal cash flow-Replacement decision Russell Industries is considering replacing a fully depreciated machine that has a remaining useful iffe of 10 years with a never, mote Lophisticated machine. The new machine will cost $192,000 and will require $29,800 in installasion costs. It will be deprechated under MACRS using a 5 -year recovery period (see the: able for the applicable depreciation percentages). A $27,000 hcrease in net working capital will be required to support the new machine. The firmis managers plan to evaluate. the potential replacement over a 4 -year period. They estimate that the old machine could be sold at the end of 4 years to net 515,800 before taxes, the now machine at the end of 4 years will be worth $76,000 before taxes. Calculate the terminal cash flow at the end of year 4 that is relevant to the proposed purchase of the new machine. The firm is subject to a 40% tax rate The terminal cash flow for the replacement decision is shown below: (Round to the nearest dotlar) Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Step by Step Solution
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