Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Terminal cash flow-Replacement decision Russell Industries is considering replacing tydepreciated machine that has a remaining see of 10 years with a newer, more sophisticated machine.

image text in transcribed
Terminal cash flow-Replacement decision Russell Industries is considering replacing tydepreciated machine that has a remaining see of 10 years with a newer, more sophisticated machine. The new machine will cost 5210,000 and will require $29.900 in installation cost will be depreciated under MACRS using a 5-year recovery period for the table for the applicable depreciation percentages) A $30,000 increase in networking capital be required to support the new machine. The fee's managers plan to evaluate the potential placement over a 4-year period. They estimate that the old machine could be sold at the end of 4 years to net 516,000 before was the new machine at the end of 4 years will be worth $78.000 before taxes Calculate terminal cash flow at the of year that is relevant to the proposed purchase of the new machine. The fits betto 40% The terminal cash flow for the replacement decision is shown below. Round to resto Data Table Proceeds from sale of new machine Taxons of new machine Total whertax proceed-news (Click on the con here in order to copy the contents of the datatable below to spreadt) Proceeds from sale of old machine 5 Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Tax on sale of old machine Percentage by recovery year Total wherto proceeds-olet Recovery year 3 years 5 years 7 years 10 years 335 20 Change in Put working capital 14% 10W 32 25 10 10% 10 145 12% 12% 125 121 05 7 43 ox . ON ON Enter any number in the edit folds and then continue to the next question 11 Total 100% 100 100% 100% The percentave been rounded the percent to calculation while 45 to

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introductory Econometrics For Finance

Authors: Chris Brooks

3rd Edition

1107661455, 9781107661455

More Books

Students also viewed these Finance questions

Question

Write short notes on Interviews.

Answered: 1 week ago

Question

Identify the human resource management functions.

Answered: 1 week ago

Question

Describe who performs human resource management activities.

Answered: 1 week ago