Terminal cash flow-Replacement decision Russel Industries is considering repiscing a fully deprecated machine that has a remaining useful life of 10 years with a newer, mare sophisticated machine. The new machine wil cost $209,000 and will require $30,000 in installation costs. It wil be deprecated under MACRS using a 5-year recovery period (see the table for the applicable depreciation percentages) A $23,000 increase in net wordng capital wil be required to support the new machine. The firm's managers plan to evaluate the potential replacement over a 4-year period. They estirate that the old machine could be sold at the erd of 4 years to net $17,000 before taxes; the new machine at the end of 4 years will be worth $73,000 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 40% tax rate The terminal cash flow for the replacement decision is shown below: (Round to the nearest dolar. S X Data table sl Proceeds from sale of new machine Tax on sale of new machine Tolalalar lax proceeds new assal -- Proceeds from an of old machine Tax on sale of old machine Total after-tax proceeds-old asset Change in networking capital Terminal cash flow Cick on the icon located on the top-ight corner of the data teble below in order to copy its contents into a 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 10 years 7 years 33% 20% -14% 2 45% 32%, 25% 18% 3 15% 10% 18% 14% 4 7% 12% 122 5 12% OX 98 8 5% 99 9 7% 6% 10% 12% 9 10 6% 11 4% Totals 100% 100% 100% 100% 'Theve percentages have been founded to the nearest whole percent to simplify calculations while retaining malam. To calculate the actual deamciation for tax purposes, be sure to apply the actual urrounded percentages or directly apply double-dedining balance (200%) depreciation usirg the half-year convention Print Done