X Problem 10.LO2.30 (similar to) Question Help Tinney & Smyth Inc. is considering the purchase of a new batch polymer-bonding machine for producing Crazy Rubber, a children's toy that is soft and pliable but also bouncy. The machine will increase EBITDA by $265,000 per year for the next two years. Assume that operating cash flows occur at the end of each year. The machine's purchase price is $340,000 and the salvage value at the end of two years is $85,000. The machine is in Class 43 with a depreciation rate of 30%. To run the Crazy Rubber production line, the company will need to purchase an inventory of polydimethylsiloxane and boric acid for a total cost of $16,000. The operating cash flow in Year 2 is $202,595 and the present value of tax shields due to salvage is $29,395. The company's cost of capital is 11.9% and the tax rate is 35%. What is the terminal year cash flow for the project in Year 2 (including the operating cash flow)? Input your answers in the units indicated, but do not use the rounded values in your calculations. Instead, in your intermediate calculations, you should carry as many significant figures as necessary to make your final answer accurate to pennies. The terminal cash flow (including the operating cash flow) in Year 2 is $ . (Round to the nearest dollar.) X Problem 10.LO2.30 (similar to) Question Help Tinney & Smyth Inc. is considering the purchase of a new batch polymer-bonding machine for producing Crazy Rubber, a children's toy that is soft and pliable but also bouncy. The machine will increase EBITDA by $265,000 per year for the next two years. Assume that operating cash flows occur at the end of each year. The machine's purchase price is $340,000 and the salvage value at the end of two years is $85,000. The machine is in Class 43 with a depreciation rate of 30%. To run the Crazy Rubber production line, the company will need to purchase an inventory of polydimethylsiloxane and boric acid for a total cost of $16,000. The operating cash flow in Year 2 is $202,595 and the present value of tax shields due to salvage is $29,395. The company's cost of capital is 11.9% and the tax rate is 35%. What is the terminal year cash flow for the project in Year 2 (including the operating cash flow)? Input your answers in the units indicated, but do not use the rounded values in your calculations. Instead, in your intermediate calculations, you should carry as many significant figures as necessary to make your final answer accurate to pennies. The terminal cash flow (including the operating cash flow) in Year 2 is $ . (Round to the nearest dollar.)
