Question: PLEASE show all your work!!! Terminal cash flow: Replacement decision Russell Industries is considering replacing a fully depreciated machine that has a remaining useful life

 PLEASE show all your work!!! Terminal cash flow: Replacement decision Russell

Industries is considering replacing a fully depreciated machine that has a remaining

PLEASE show all your work!!!

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 $199,000 and will require $29,300 in installation costs. It will be depreciated under MACRS using a 5-year recovery period (see the table for 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 $14,900 before taxes; the new machine at the end of 4 years will be worth $80,000 before taxes. Calculate the terminal cash flow at the end of year 4 that is relevant to the probosed purchase of the new machine. The firm is subiect to a 21% tax rate. Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes

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