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please do in excel and show work in cells. having trouble. thanks Terminal cash flow: Varlous lives and sale prices Looner Industries is currently analyzing
please do in excel and show work in cells. having trouble. thanks
Terminal cash flow: Varlous lives and sale prices Looner Industries is currently analyzing the purchase of a new machine that costs $164,000 and requires $20,200 in installation costs. Purchase of this machine is expected to result in an increase in net working capital of $30,200 to support the expanded level of operations. The firm plans to depreciate the machine under MACRS using a five-year recovery period (see the table for the applicable depreciation percentages) and expects to sell the machine to net $9,600 before taxes at the end of its usable life The fim is subject to a 21% tax rate. a. Calculate the terminal cash flow for a usable life of (1) three years, (2) five years, and (3) seven years. b. Discuss the effect of usable life on terminal cash flows using your findings in part a c. Assuming a five-year usable life, calculate the terminal cash flow if the machine were sold to net (1) $9,210 or (2) $169,100 (before taxes) at the end of five years. d. Discuss the effect of sale price on terminal cash flow using your findings in part c. a. Calculate the terminal cash flow for a usable life of (1) 3 years, (2) 5 years, and (3) 7 years. The following table can be used to solve for the terminal cash flow: (Round to the nearest dollar.) 3-year Proceeds from sale of proposed asset +/- Tax on sale of proposed asset Total after-tax proceeds-new + Change in net working capital Terminal cash flow No Rounded Depreciation Percentages by Recovery Year Using MAC S 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% 7 9% 8 4% 9 10 11 Totals 100% 100% 100% "These percentages have been rounded to the nearest whole percent to simplify calcula Step by Step Solution
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