Terminal cash flow$-$Various lives and sale prices Looner Industries is currently analyzing the purchase of a new machine that costs $$160,000$ and requires $$20,000$ in installation costs. Purchase of this machine is expected to result in an increase in net working capital of $$30,000$ to support the expanded level of operations. The firm plans to depreciate the machine under MACRS using a $5-$year recovery period $($see the table for the applicable depreciation percentages$)$ and expects to sell the machine to net $$10,000$ 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 $(1)$ $$9,000$ or $(2)$ $$170,000($before taxes$)$ at the end of $5$ years.

d$.$ Discuss the effect of sale price on terminal cash flow using your findings in part $c.$

$+/-$ Tax on sale of proposed asset

Total after$-$tax proceeds$-$new

Change in net working capital

Terminal cash flow

$($Round to the nearest dollar.$)$

$\backslash$table$[[$$$,(400)$