Terminal cash flow-Various lives and sale prices Looner Industries is currently analyzing the purchase of a new machine that costs $156,000 and requires $19,700 in installation costs. Purchase of this machine is expected to result in an increase in net working capital of $29,900 to support the expanded level of operations. The firm plans to depreciate the machine under MACRS using a 5-year recovery period (see the table for the applicable depreciation percentages) an expects to sell the machine to net $9,800 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 flow if the machine were sold to net (1) $8,785 or (2) $170,300 (before taxes) at the end of 5 years. d. Discuss the effect of sale price on terminal cash flow using your findings in part c. The following table can be used to solve for the terminal cash flow: (Round to the nearest dollar.) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year Recovery year 3 years 5 years 7 years 33% 20% 14% 45% 32% 25% 15% 18% 12% 12% 12% 99 WN 10 years 10% 18% 14% 12% 1996 79% 9% 8% 99 79 00 O 4% 6% 496 100% Totals Thaca narrantanse have ha Arect w la narrent tacimli rollations while