Homework: HW #19- Chapter 11B Save Score: 0 of 3 pts 3 of 5 (0 complete) HW Score: 0%, 0 of 39 pts P11-15 (similar to) Question Help 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 $203,000 and will require $29,600 in installation costs. It will be depreciated under MACRS using a 5-year recovery period (see the table for the applicable depreciation percentages). A $21,000 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 $14,400 before taxes; the new machine at the end of 4 years will be worth $70,000 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. -X Data Table The terminal cash flow for the replacement decision is shown below: (Round to the n Proceeds from sale of new machine $ Tax on sale of new machine First Four Property Classes Total after-tax proceeds-new asset Proceeds from sale of old machine 7 years 10 years $ 3 years 33% 45% 15% 7% Tax on sale of old machine Total after-tax proceeds-old asset Change in net working capital Percentage by recovery year* 5 years 20% 14% 32% 25% 19% 18% 12% 12% 12% 9% 5% 9% 9% 4% Recovery year 1 2 3 4 5 6 7 8 9 10 $ 10% 18% 14% 12% 9% 8% 7% 6% 6% 6% 4% 100% Terminal cash flow $ Enter any number in the edit fields and then click Check Answer. 11 Totals All parts showing 100% 100% 100%