Terminal cash for flow-Replacement decision Russell Industries is considering replacing a fully depreciated machines that has a remaining useful life of 10 year with a newer, more machine. The new machine will cost $204,000 and will require $29,100 in installation costs. It will be depreciated under MACRS using a 5-year recovery period for the applicable depreciations percentages. A $20,000 increase in net working capital will be required to support the new machine. The firm's manager plane 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 $13,500 before taxes, the new machine at the end of 4 years will be worth #78,000 before taxes. Calculate the terminal cash flow end of year 4 that is relevant to the proposed purchase of the new machine. The firm is subject to a 40% tax rate. (Click on the ken located on the top-right of the data table below in order to copy its content into a spreadsheet.) Rounded Depreciation percentage by Recovery Year Using MACRS for First Four Property Classes These percentages have been rounded to the whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purpose, be apply the actual unrounded percentage or directly apply double declining balance (200%) depreciation using the half-year conversions. Terminal cash for flow-Replacement decision Russell Industries is considering replacing a fully depreciated machines that has a remaining useful life of 10 year with a newer, more machine. The new machine will cost $204,000 and will require $29,100 in installation costs. It will be depreciated under MACRS using a 5-year recovery period for the applicable depreciations percentages. A $20,000 increase in net working capital will be required to support the new machine. The firm's manager plane 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 $13,500 before taxes, the new machine at the end of 4 years will be worth #78,000 before taxes. Calculate the terminal cash flow end of year 4 that is relevant to the proposed purchase of the new machine. The firm is subject to a 40% tax rate. (Click on the ken located on the top-right of the data table below in order to copy its content into a spreadsheet.) Rounded Depreciation percentage by Recovery Year Using MACRS for First Four Property Classes These percentages have been rounded to the whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purpose, be apply the actual unrounded percentage or directly apply double declining balance (200%) depreciation using the half-year conversions