russell indistries is condiering replwcing a fully depreciated machine that has a remaining useful life of 10 years with a newer, more sophisticated machine. the new machine will cost 194000 and will require 30800 in installed costs. it will depreciate under MACRS using a 5 year recovery period a 24000 increase in net working capitol will be required to support the new machine the firms manager plan to evelaute the potential replacement over a 4 year period they estimate that the okd machine could be sold at the end of 4 years to net 15400 before taxes the new machine at the end of 4 years wil lbe worth 73000 before taxes calculate the terminal cash flow at the end of year 4 that is relevent to the proposed purchase of the new machine. the firm is subject ro a 40% tax rate

Terminal cash flow-Replacement decision Russell Industries is considering replacing a fully depreci period (see the table for the applicable depreciation percentages). A $24,000 increase in net working new machine at the end of 4 years will be worth $73,000 before taxes. Calculate the terminal cash flow at The terminal cash flow for the replacement decision is shown below (Round to the nearest dollar) 5 $ $ Proceeds from sale of new machine 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 Terminal cash flow $ N ick on the icon here in order to copy the contents of the data table below into a spreadsheet) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year Recovery year 3 years 5 years 7 years 10 years 1 33% 20% 14% 10% 2 45% 32% 25% 18% 3 15% 19% 18% 14% 4 7% 12% 12% 12% 5 12% 9% 9% 5% 9% 8% 7 9% 7% 4% 6% 6% 11 4% Totals 100% 100% 100% 100% "These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year convention 6 6% 8 9 10 Print Done