Terminal cash$$ flow: Replacement decision$$Russell Industries is considering replacing a fully depreciated machine that has a remaining useful life of $10$ years with a$$ newer, more sophisticated machine. The new machine will cost $193,000$ and will require $29600$ in installation costs. It will be depreciated under MACRS using a$5-$year recovery period$($see the table LOADING... for the applicable depreciation$$ percentages$).$ A $27,000$ increase in net working capital will be required to support the new machine. The$$ firm's managers plan to evaluate the potential replacement over a$4-$year period. They estimate that the old machine could be sold at the end of $4$ years to net $13600$ before$$ taxes; the new machine at the end of $4$ years will be worth $77,000$ before taxes. Calculate the terminal cash flow at the end of year $4$ that is relevant to the proposed purchase of the new machine. The firm is subject to a $21\%$ tax rate.

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Part $1$

The terminal cash flow for the replacement decision is shown$$ below:$($Round to the nearest$$ dollar.$)$

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

$133\%20\%14\%10\%$

$245\%32\%25\%18\%$

$315\%19\%18\%14\%$

$47\%12\%12\%12\%$

$512\%9\%9\%$

$65\%9\%8\%$

$79\%7\%$

$84\%6\%$

$96\%$

$106\%$

$114\%$

Totals $100\%100\%100\%100\%$