Terminal cash flow- Various lives and sale prices Looner Industries is currently analyzing the purchase of a new machine that costs $155.000 and requires 519,700 in installation costs. Purchase of this machine is expected to result in an increase in networking capital of 529,600 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 $10,400 before taxes at the end of its usable life. The firm is subject to a 40% tax rate 1. Calculate the terminal cash flow for a usable life of (1) 3 years, (2) 5 years and (3) 7 years. Assuming a 5-year usable life, calculate the terminal cash flow i the machine were sold to nat (1) 58,735 or (2) S169,600 (before taxes) at the end of 5 years. d. Discuss the effect of sale price on terminal cash flow using your findings in partc. a. Calculate the terminal cash flow for a usable life of (1) 3 years (2) 5 years, and (3) 7 years. The following table can be used to solve for the terminal cash flow. (Round to the nearest dollar.) 3-year $ Proceeds from sale of proposed asset +/- Tax on sale of proposed asset Total after-tax proceeds-new + Change in net working capital Terminal cash flow $ $ $ Enter any number in the edit fields and then click Check Answer 6 Pants remaining Clear All Check Answer P11-14 (similar to gestion Help - X Data Table and requires level of In percentages) and Terminal cash flow $19,700 in installat operations. The find expects to sell the a. Calculate the ter b. Discuss the effed C. Assuming a 5- d. Discuss the effe d of 5 years a. Calculate the tend The following table Proceeds from +- Tax on sale (Click 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 33% 20% 14% 10% 45% 32% 25% 18% 19% 18% 79 12% 12% 12% 9% 9% 5% 8% 9% 7% 6% 6% 10 6% 11 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 (2009) depreciation using the half-year convention Total altertax + Change in ne Terminal cash Enter any number Print Done 6 Pants remaining swer