= E Homework: Chapt. 11 - Capital Budgeting Cash Flows Question 5, P11-15 (similar to) HW Score: 46.34%, 19 of 41 points Points: 0 of 8 Save Terminal cash flow-Replacement decision Russell Industries is considering replacing a fully depreciated machine that has a remaining useful life of 10 years with a newer, more sophisticated machine. The new machine will cost $190,000 and will require $30,000 in installation costs. It will be depreciated under MACRS using a 5-year recovery period (see the table for the applicable depreciation percentages). A $22,000 increase in net working 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 $16,300 before taxes; the new machine at the end of 4 years will be worth $77,000 before taxes. Calculate the terminal cash flow at the end of vear 4 that is relevant to the proposed purchase of the new machine. The firm is subiect to a 40% tax rate. The terminal cash flow for the replacement decision is shown below: (Round to the nearest dollar.) Proceeds from sale of new machine $ 77000 - X Tax on sale of new machine Data table Total after-tax proceeds-new asset $ S (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Proceeds from sale of old machine Tax on sale of old machine Total after-tax proceeds-old asset Change in net working capital $ $ Terminal cash flow $ Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year* Recovery year 3 years 5 years 7 years 1 33% 20% 14% 2 45% 32% 25% 3 15% 19% 18% 4 7% 12% 12% 5 12% 9% 6 5% 9% 9 7 9% 8 O 4% 9 9 10 11 Totals 100% 100% 100% Help me solve this View an example Get more help