A corporation want to estimate the terminal cash flow. The proposed machine will be disposed of at the end of its usable life of five years at an estimated sale price of $3,500. The machine has an original purchase price of $80,000, installation cost of $20,000, and will be depreciated under the five-year MACRS. Net working capital is expected to decline by $6,200. The firm has a 40 percent tax rate on ordinary income and long-term capital gain.Calculate the terminal cash flow. 5 year MACRS depreciation percentagesYear Percentage1 0.22 0.323 0.194 0.125 0.126 0.05 Click to see additional instructionsA corporation want to estimate the terminal cash flow. The proposed machine will be disposed of at the end of its usable life of five years at anestimated sale price of $3,500. The machine has an original purchase price of $80,000, installation cost of $20,000, and will be depreciated under thefive-year MACRS. Net working capital is expected to decline by $6,200. The firm has a 40 percent tax rate on ordinary income and long-term capitalgain.Calculate the terminal cash flow. $5 year MACRS depreciation percentagesYearPercentage10.20.3230.1940.120.1260.05

Terminal cash flow is cash flow you received at end of projects after disposal of equipment.So this…

Answered: corporation want to estimate the…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 17P

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A corporation want to estimate the terminal cash flow. The proposed machine will be disposed of at the end of its usable life of five years at an estimated sale price of $3,500. The machine has an original purchase price of $80,000, installation cost of $20,000, and will be depreciated under the five-year MACRS. Net working capital is expected to decline by $6,200. The firm has a 40 percent tax rate on ordinary income and long-term capital gain.

Calculate the terminal cash flow.

5 year MACRS depreciation percentages

Year Percentage

1 0.2
2 0.32
3 0.19
4 0.12
5 0.12
6 0.05

Click to see additional instructions
A corporation want to estimate the terminal cash flow. The proposed machine will be disposed of at the end of its usable life of five years at an
estimated sale price of $3,500. The machine has an original purchase price of $80,000, installation cost of $20,000, and will be depreciated under the
five-year MACRS. Net working capital is expected to decline by $6,200. The firm has a 40 percent tax rate on ordinary income and long-term capital
gain.
Calculate the terminal cash flow. $
5 year MACRS depreciation percentages
Year
Percentage
1
0.2
0.32
3
0.19
4
0.12
0.12
6
0.05

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