Question: Ive attached the question and data table. Please answer all parts and round to nearest dollar. Data Table (Click on the icon located on the

Ive attached the question and data table. Please answer all parts and round to nearest dollar.
Ive attached the question and data table. Please answer all parts and
round to nearest dollar. Data Table (Click on the icon located on

Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year 10 years 10% 18% 14% 12% 9% 8% 7% 6% 6% 6% 7 years 14% 25% 18% 12% 9% 8% 9% A% 5 years 20% 32% 19% 12% 12% 5% 3 years 33% 45% 15% 7% Recovery year 2 5 10 100% 100% 100% 100% Totals These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year Terminal cash flow Replacement decision Russell Industries is considering replacing a fully depreciated machine that has a remaining useful life of 10 years with a newer, more sophisticated machine. The new machine will cost $206,000 and will require $30,200 in installation costs. It will be depreciated under MACRS using a 5-year recovery period (see the tablefor the applicable depreciation percentages). A $27,000 increase in net working capital will be required to support the new machine. The firm's managers plan to evaluate the potential replacement over a 4-year period. They estimate that the old machine could be sold at the end of 4 years to net $15,200 before taxes; the new machine at the end of 4 years will be worth $76,000 before taxes. Calculate the terminal cash flow at the end of year 4 that is relevant to the proposed purchase of the new machine. The firm is subject to a 40% tax rate. The terminal cash flow for the replacement decision is shown below: (Round to the nearest dollar.) Proceeds from sale of new machine S Tax on sale of new machine Total after-tax proceeds-new asset Proceeds from sale of old machine Tax on sale of old machine Total after-tax proceeds-old asset Change in net working capital Terminal cash flow

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!