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Question 17 A corporation is evaluating the relevant cash flows for a capital budgeting decision and must estimate the terminal cash flow. The proposed machine

Question 17

A corporation is evaluating the relevant cash flows for a capital budgeting decision and must estimate the terminal cash flow. The proposed machine will be disposed of at the end of its usable life of five years at an estimated sale price of R15 000. The machine has an original purchase price of R80 000, installation cost of R20 000, and will be depreciated under the five-year MACRS. The firm has a 40% tax rate on ordinary income and long-term capital gain. Calculate the terminal cash flow.

  • A. 10890
  • B. 11212
  • C. 11000
  • D. 11111

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