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please help with all the parts. thanks Terminal cash flowVarious lives and sale prices Looner Industries is currently analyzing the purchase of a new machine
please help with all the parts. thanks
Terminal cash flowVarious lives and sale prices Looner Industries is currently analyzing the purchase of a new machine that costs 5163,000 and requires $19.900 in installation costs. Purchase of this machine is expected to result in an increase in net working capital of $29,700 to support the expanded level of operations. The firm plans to depreciate the machine under MACRS using a 5-year recovery period (see the table for the applicable depreciation percentages) and expects to sell the machine to net $10,100 before taxes at the end of its usable life. The firm is subject to a 40% tax rate. a. Calculate the terminal cash flow for a usable life of (1) 3 years, (2) 5 years, and (3) 7 years. b. Discuss the effect of usable life on terminal cash flows using your findings in part a. C. Assuming a 5-year usable life, calculate the terminal cash flow if the machine were sold to net (1) $9,145 ar (2) $170,500 (before taxes) at the end of 5 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 10100 5 S Proceeds from sale of proposed asset +/- Tax on sale of proposed asset Total after-tax proceeds-new + Change in net working capital S S Terminal cash flow SStep by Step Solution
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