Terminal cash flow-Replacement decision Russell Industries is considering replacing a fully depreciated machine that has a remaining useful life of 10 years with a newer, more sophisticated machine. The new machine will cost $200,000 and will require $30,000 in installation costs. It will be depreciated under MACRS using a 5-year recovery period (see the table for the applicable depreciation percentages). A $25,000 increase in net working capital will be required to support the new machine. The firm's managers plan to evaluate the potential replacement over a 4-year period. They estimate that the old machine could be sold at the end of 4 years to net $15,000 before taxes, the new machine at the end of 4 years will be worth $75,000 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 i Data Table - X $ Recovery year N Proceeds from sale of new machine Tax on sale of new machine Total after-tax proceeds-new asset Proceeds from sale of old machine Tax on sale of old machine Total after-tax proceeds-old asset Change in net working capital 3 years 33% 45% 15% Percentage by recovery year* 5 years 7 years 20% 14% 32% 25% 19% 18% 12% 12% 12% 5% 10 years 10% 18% 14% 7% 12% 9% 9% 8% 9% Terminal cash flow OO 000) 4% 6% 6% 6% 10 11 4% Enter any number in the edit fields and then contir Totals 100% 100% 100% 100% *These percentages have been rounded to the nearest whole percent to simplify calculations while