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 $199,000 and will require $30,800 in installment costs. It will be depreciated under MACRS using a five year recovery. A $28,000 increase in net working capital will be required to support the new machine. The firms managers plan to evaluate the potential replacement over a four-year period. They estimate That the old machine could be sold at the end of four years to net $15,100 before taxes the new machine at the end of four years will be worth $72,000 before taxes. Calculate the terminal cash flow at the end of the year for that is relevant to be proposed purchase of the new machine. The firm is subject to a 40% tax rate

Page | St. Do Homework - Hannah Sanders - Google Chrome e mathx.com/Student/PlayerHomework.aspx?homeworkld-563302614&questionid=3&flushed=true&cid=5975125centerwin-yes FIN 3403 Summer 2020 (1) Hannah Sanders & 06/28/20 1:27 PM Sign Senu Homework: Ch 11 HW Save b Fil Score: 0 of 1 pt 6 of 8 (0 complete) HW Score: 0%, 0 of 8 pts P11-22 (similar to) Question Help Terminal cash flow Replacement decision Russell Industries is considering replacing a fully deprecated machine that has a remaining useful life of 10 years with a newer, more ments sophisticated machine. The new machine will cost $199,000 and will require 530 800 in installation costs. It will be depreciated under MACRS using a 5-year recovery period (see the table for the applicable depreciation percentages). A 528,000 increase in networking capital will be required to support the new machine. The firm's managers plan to evaluate the nework potential replacement over a 4-year period. They estimate that the old machine could be sold at the end of 4 years to net 515,100 before taxes, the new machine at the end of 4 years wil be worth $72,000 before taxes Calculate the terminal cash flow at the end of year 4 is relevant to the proposed purchase of the new machine. The firm is subject to a 40% tax rate Quix/Test The terminal cash flow for the replacement decision is shown below. (Round to the nearest dolar) Proceeds from sale of new machine 5 Tax on sale of new machine 010 Total after-tax proceeds new asset Proceeds from sale of old machine Tacon sale of old machine Total after-tax proceeds-old asset Change in networking capital $ Terminal cash flow ncorrect Enter any number in the edit fields and then dick Check Answer CA All parts showing Check Answer Sanders - Google Chrome /PlayerHomework.aspx?homeworkld=563302614&questionid=3&flushed=true&cld=5975125¢erwin=yes Hannah Sanders & I (1) Ch 11 HW HW 6 of 8 (0 complete) Data Table lears eco pla led Eger ine a sub taxe P the of ng machi ceed of o nachi oceed tang 1296 (Click on the icon located on the top-right corner of the data table below in order to copy its contents 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 33% 2046 149 10% 459 3296 25% 18% 15% 1996 1996 1496 79% 1296 12% 1296 99% 996 5% 9% 8% 796 8 696 69 10 6% 495 11 Totals 100% 100% 10096 100% "These percentages have been rounded to the nearest whole percent to simplity 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 5 946 7 9 the edil Print Done Shock OK N CHE o 8 E