Alpha Manufacturing has embarked on a post-audit review for one of their underperforming projects. The project required the firm to purchase specialised machinery 2 years ago that cost $152415. The firm also had to pay an additional $10485 for delivery and installation. These costs were to be depreciated over 8 years to a $0 residual value. An initial increase of $78935 was also made in net working capital because of the project, as well as further increases of $11816 per annum. Due to the recent underperformance, Alpha Manufacturing is intending to terminate the project and sell the specialised machinery for $75110. The firm's marginal tax rate is 30 percent.

What is the termination cash flow of this project if the firm decides to liquidate the underperforming project today?

Answer rating: 100% (QA)

To calculate the termination cash flow of the project we need to consider the following components 1 ... View the full answer