Homework: Homework Set 4 Score: 0 of 2 pts 12 of 25 (12 complete HW Score: 29.36%, 14.68 of 50 P11-15 (similar to) Question Help Terminal cash flow-Replacement decision Russell Industries is considering replacing a fully depreciated machine hat has a remaining useful We of 10 years with a newer, more sophisticated machine. The new machine wil.com $210.000 and will require $29.500 in installation costs. It will be depreciated under MACRS using a 5 year recovery period (see the table for the applicable depreciation percentages). A $30.000 increase in networking capital will be required to report 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 re$13,100 before wes the new machine at the end of 4 years will be worth $71.000 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 dollar) Proceeds from sale of machine Tax on sale of new machine Total wher-tax proceeds new asset Proceeds from sale of old machine Tax on sale of old machine Toalher-tax proceeds-old Change in networking at Terminal cash flow s CA Enter any number in the defide and then click Check A. All parts showing ES GE ou 30 esc A & # delete 0 $ 4 % 5 No 9 8 7 6 3 0 Industries is considering replacing a fully depreciated machine that has a remaining useful life of 10 years with a newer, more sophistice apred 100 incre the Data Table 100 bei malce Ite. show! 7 years 1 4 (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 Percentage by recovery year Recovery year 3 years 5 years 10 years 33% 20% 14% 10% 2 45% 32% 25% 18% 3 15% 19% 18% 14% 7% 12% 12% 12% 12% 9% 9% 5% 9% 8% 9% 7% 6% 9 69 10 6% 11 4% Totals 100% 100% 100% 100% *These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half year convention 5 8 7 8 Print 100m Done click Check Answer Clear All MacBook Pro 80 F3 DOO COD ad DD FS DI F8 F6 510 # $ A & - 3 4 5 6 7 8 9 0 E R T Y U I 0 P
