I have some difficulties while doing this question: Calculate the terminal year non-operating cash flows (show all work).

Company X has a machine that has been in use for two years. It was purchased new for $200,000, installed. The machine is being depreciated using the straight-line method with a 5-year useful life and no salvage value. If the existing machine is held for 3 more years, it is expected that It would be worthless at the end of the 3-year period. The old machine can be sold for $120,000 today. A replacement machine will cost $225,000 installed and will be depreciated over a 5- year period, with no salvage value. The new machine is expected to reduce annual operating expenses by $5,000, but will require a one-time $2,000 increase in working capital. The current operating budget for the old machine over the next three years is shown below. Year 1 Year 2 Year 3 Sales $150,000 $150,000 $150,000 Operating Expenses 50,000 50,000 50,000 Depreciation 40,000 40,000 40,000 EBT $60,000 $60,000 $60,000 Taxes (40%) 24,000 24,000 24,000 Net Operating Income $36,000 $36,000 $36,000 If the new machine is purchased, the project will be terminated at the end of Year 3. At that time, the new machine can be sold for $128,333 and the $2,000 in working capital will be recovered. The rm, which plans to issue debt with a before-cost of 9% to nance the new machine, has a weighted average cost of capital of 10%. Use the above data to answer the next three questions