Question $6$

A new machine is expected to be sold at the end of $5$ years. Calculate the projected

after$-$tax cash flow from selling this machine.

The new machine originally cost $$650,000$ including installation.

The tax rate is $31\%.$ The tax impact on gains or losses is calculated based on the

tax rate.

The expected selling price is $$95,000$ net of removal and clean$-$up$.$

The machine has an economic life of $5$ years.

The machine will be depreciated as a $5$ year asset using the MACRS schedule

$($below$).$

Year $120\%$

Year $2,32\%$

Year $3,19\%$

Year $4,12\%$

Year $5,12\%$

$$77,175$

$$67,500$

$$80,425$

$$75,625$