Question
You are considering a new project that requires $300,000 investment in a machine, including installation and shipping cost. The life of the machine is three
You are considering a new project that requires $300,000 investment in a machine, including installation and shipping cost. The life of the machine is three years, and it depreciates via 3-year MACRS methods (33.33%, 44.45%, 14.81%, and 7.41%). If you operate this project, the annual sales of the firm increases by $250,000 a year, and the annual operating expense increased by $100,000. The firm has a marginal tax rate of 34%. In order to start the project, the firm has to invest $30,000 in working capital, which will be fully recaptured at the end of the project.. The expected market value of the machine is $50,000 in three years when the project is terminated. What is the terminal cash flow of this project? Round to the nearest penny. Do not include adollar sign in your answer.
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