Alpha Manufacturing has embarked on a post - audit review for one of their underperforming projects. The
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Question:
Alpha Manufacturing has embarked on a postaudit review for one of their underperforming projects. The project required the firm to purchase specialised machinery years ago that cost $ The firm also had to pay an additional $ for delivery and installation. These costs were to be depreciated over years to a $ residual value. An initial increase of $ was also made in net working capital because of the project, as well as further increases of $ per annum. Due to the recent underperformance, Alpha Manufacturing is intending to terminate the project and sell the specialised machinery for $ The firms marginal tax rate is percent.
What is the termination cash flow of this project if the firm decides to liquidate the underperforming project today?
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