Six years ago, ABC Company invested $47,736 in a new machinery. The investment in net working capital was $9,046 which would be recovered at the end of the project. Today, ABC Company is selling the machinery for $17,745. Today, the book value of the machinery is $11,017. The tax rate is 35 percent. What are the terminal cash flows in Year 6?Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Question
Asked Jan 19, 2020
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Six years ago, ABC Company invested $47,736 in a new machinery. The investment in net working capital was $9,046 which would be recovered at the end of the project. Today, ABC Company is selling the machinery for $17,745. Today, the book value of the machinery is $11,017. The tax rate is 35 percent. What are the terminal cash flows in Year 6?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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Expert Answer

Step 1

The selling price for the machine is $17,745.

The book value of the machine is $11,017.

Step 2

The gain made on sale of machine is calculated below:

Finance homework question answer, step 2, image 1
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Step 3

The after-tax gain on sale ...

Finance homework question answer, step 3, image 1
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