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 $209,000 and will require $30,800 in installation costs. It will be depreciated under MACRS using a 5-year recovery period (see the table for the applicable depreciation percentages). A $29,000 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 $16,000 before taxes, the new machine at the end of 4 years will be worth $77,000 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. 3 years 7 years ounded Depreciation Percentages by Recovery Year Using MACRS for rst Four Property Classes Percentage by recovery yeart Recovery year 5 years 33% 20% 14% 2 45% 32% 25% 3 15% 19% 18% 4 7% 12% 12% 5 12% 9% 7 9% 8 9% 9 10 11 6 5% 10 years 10% 18% 14% 12% 9% 8% 7% 6% 69% 16% 480 100% 4% Totals 100% 100% 100% The terminal cash flow for the replacement decision is shown below: (Round to the nearest de 5 Proceeds from sale of new machine Tax on sale of new machine $ Total after-tax proceeds-new asset Proceeds from sale of oid machine Tax on sale of old machine CA Total after-tax proceeds old asset Change in net working capital Terminal cash flow