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Cck to see additionalist Russell Industries is considering replacing a fully deprecated machine that has a remaining useful life of 10 years with a newer,

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Cck to see additionalist Russell Industries is considering replacing a fully deprecated machine that has a remaining useful life of 10 years with a newer, more sophisticated machine. The new machine will cost $194000 and will require 530,400 in installation costs. It will be depreciated under MACRS using a 5-year recovery period for the applicable depreciation percentages). A 526,000 increase in networking capital will be required to support the new machine. The firm's 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 516,800 before takes the new machine at the end of 4 years will be worth $75,000 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 21 tax rate. (Round to the nearest dollar.) Proceeds from sale of new machine Tax on sale of new machine Total after tax proceeds new asset Proceeds from sale of old machine Tax on sale of old machine Total after tax proceedvold asset Change in net working capital Terminal cash flow MACRS Recovery y s Years Year 20% 5 6 199 129 129 54

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