Terminal cash flow: Various lives and sale prices Looner Industries is currently analyzing the purchase of a new machine that costs $$165,000$ and requires $$19,700$ in installation costs. Purchase of this machine is expected to result in an increase in net working capital of $$29,800$ to support the expanded level of operations. The firm plans to depreciate the machine under MACRS using a five$-$year recovery period $($see the table $$10,200$ before taxes at the end of its usable life. The firm is subject to a $21\%$ tax rate.

a$.$ Calculate the terminal cash flow for a usable life of $(1)$ three years, $(2)$ five years, and $(3)$ seven years.

b$.$ Discuss the effect of usable life on terminal cash flows using your findings in part a$.$

c$.$ Assuming a five$-$year usable life, calculate the terminal cash flow if the machine were sold to net $(1)$ $$9,235$ or $(2)$ $$169,500($before taxes$)$ at the end of five years.

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

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.$)$

$\backslash$table$[[,3-$year$],[$Proceeds from sale of proposed asset,$

Data table

$($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

$\backslash$table$[[$Recovery year,Percentage by recovery year$*],[3$ years,$5$ years,$7$ years,$10$ years$],[1,33\%,20\%,14\%,10\%$