P11-22 (similar to) Question Help 0 Terminal cash flowReplacement 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 $207,000 and will require $30,000 in installation costs. It will be deprecated 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 $15,500 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 year 4 that is relevant to the proposed purchase of the new machine. The fim 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 new machine S 77000 Data Table S 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 proceeds-old asset Change in net working capital (Click on the icon located on the top-right comer of the data table below in order to copy its contents into a spreadsheet.) $ 3 years 5 years 7 years Terminal cash flow $ Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year* Recovery year 1 339 20% 14% 2 45% 32% 25% 3 15% 19% 18% 7% 12% 12% 5 12% 9% 6 5% 9% 7 9% 8 4% 9 4 10 years 10% 18% 14% 12% 994 896 7% 6% 6% 10 Enter any number in the edit fields and then click Check Answer. . ? 11 Totals All parts showing 100% 100% 100% 100%