Terminal cash flow Various lives and sale prices Looner Industries is currently analyzing the purchase of a new machine that costs $161.000 and requires $20,500 in installation costs. Purchase of this machine is expected to result in an increase in networking capital of $30,100 to support the expanded level of operations. The firm plans to depreciate the machine under MACRS using a 5-year recovery period (son the table for the applicable depreciation percentages) and expects to sell the machine to net $9,700 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 fow if the machine were sold to net (1) $9,075 or (2) $169,400 (before taxes) at the end of 5 years d. Discuss the effect of sale price on terminal cash flow using your findings in parte a. Calculate the terminal cash flow for a usable life of (1) 3 years, (2) 5 years, and (3) 7 years Data Table The following table can be used to solve for the terminal cash flow (Round to the nearest dolar) 3.year (Click on the icon located on the top right corner of the data table below in order to copy its contents into a spreadsheet.) Proceeds from sale of proposed asset $ +/- Tax on sale of proposed asset Rounded Depreciation Percentages by Recovery Year Using MACRS for $ First Four Property Classes Total after-tax proceeds-new S Percentage by recovery year Recovery year 3 years + Change in networking capital 5 years 7 years 10 years 1 20% 14% 10% Terminal cash flow $ 2 45% 25% 18% 3 15% 19% 18% 14% 4 12% 12% 5 12% 9% 6 5% 9% 8% 7 9% 7% B 6% Enter any number in the edit fields and then click Check Answer. 9 6% 10 parts 11 remaining Totals 100% 100% 100% 100% $ T%