Cash flow from salvage value of the machine in year 3: $38,320

I can't seem to properly find Cash flow in year 3, I tried including the Gained amount on sale of machine - Tax and its still not correct.

Please solve for Pt.3

Explain where I messed up

What is actually included in year 3 Cash flow.

-CF from salvage value?

-Gain from sale of machine before/ After tax?

Intro Your company is considering a project to produce electric scooters. You've spent $10,000 already on a market research study that projects the following unit sales: A B CDE 1 Year 0 1 2 3 2 Units 0 1,200 1,320 1,452 After 3 years, the market will be saturated and you will shut down production. Each scooter is expectd to sell for $360 and will incur variable costs of $252 for labor and materials. In addition, you'll incur fixed costs of 586,400 every year. You will need a new machine to produce the scooters. If you buy the machine now (year 0). it will start producing scooters next year (year 1). The machine costs $80,000 to purchase. The machine can be depreciated straight-line to zero over 5 years and can probably be sold for $40,000 after 3 years. Your company has a weighted average cost of capital of 13% and a marginal tax rate of 21% Part 1 10- Attempt 3/10 for 10 pts. What is the cash flow from salvage value of the machine in year 3? 0+ decimals Submit 18 Attempt 2/10 for 10 pts Part 2 What is the cash flow now (year 0)? -80000 Correct The $10,000 spent on the market research study is a sunk cost and should be ignored. Therefore, the only expense now is the cost of the new machine, resulting in a negative cash flow: A B 14 Year 0 23 24 Machine Cash flow -80,000 -80,000 18 Attempt 5/10 for 10 pts Part 3 What is the cash flow in year 3? 0+ decimals Submit Attemped 360 252 86400 80000 Unit price Variable costs Fixed cost machine cost Depreciation life Depreciation Tax rate Discout rate 5 years 16000 0.21 0.13 $0 Year Units Sales Variable costs Fixed costs Depr. EBIT Taxes Depreciation Gain on sale of Machine Machine Cashflow NPV 1 1200 $432,000 $302,400 $86,400 -$16,000 $27,200 -$5,712 $16,000 2 3 1320 1452 $475,200 $522,7201 -$332,640|-$365,904 -$86,400 $86,400 -$16,000-$16,000 $40,160 $54,416 -$8,434 -$11,427 $16,000 $16,000 $6,320 Taxable Gain - Taxes paid on gain $80,000 -$80,000 $35,814.16 $37,488 $47,726 $65,309 Incorrect 80000 Initial Cost Depr @ 3Yr Market Value Book Value Excess $ Tax 48000 40000 32000 $8,000 $1,680 Straight Line Depreciation Year o Year 1 Year 2 Year 3 Year 4 16000 16000 16000 16000 80000 64000 48000 32000 Depreciation Book Value Year 5 16000 16000 16000 0 Calculating the cash flow from salvage value Market value, year 3 Book Value, year 3 Taxable Gain Taxes paid on gain CF from salvage value $40,000.00 $32,000.00 $8,000.00 $1,680.00 $38,320.00