Problem #3 On January 1, 2021 Cynthia's Canneloni, Inc., purchased a new electronic pasta manufacturing equipment. The new equipment is classified as a 5-year assets for tax purposes and has an installed cost of: $ 620,000 Information regarding the existing equipment is as follows: $ Original cost Acquired Tax depreciation category 320,000 14-Feb-14 7 years a Calculate the original investment for the new equipment assuming a 40% tax rate & $80,000 gross proceeds from the sale of the existing equipment on January 1, 2021 b Calculate the terminal cash flow if the old machine and new machine residual values are $20,000 and $110,000 respectively as of December 31, 2025 Assume a 40% tax rate Tax depreciation rates 1 2 3 5-yr 20.00% 32.00% 19.20% 11.52% 11.52% 5.76% 4 7-yr 14.29% 24.49% 17.49% 12.49% 8.93% 8.92% 8.93% 4.46% 5 6 7 8