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MACRS RATE Recovery year 3 years 5 years 7 years 10 years 14% 10% 25 3 4 6 33% 20% 45 32 OA $24,000 OB $20.000 OC. $14.000 OD $16,000 15 7 19 12 12 5 CENA*** 18 14 12 9 8 7 6 A corporation is evaluating the relevant cash flows for a capital budgeting decision and must 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 $15,000 The machine has an original purchase price of 500,000, instalation cost of $20,000, and will be depreciated under the five-year MACRS Not working capital is expected to decline by $5,000. The firm has a 40 percent tax rate on ordinary income and long-term capital gain. The terminal cash flow is MACRS RATE Recovery year 3 years Syears 7 years 10 years 33% 45 15 1 1 2 3 4 5 6 7 9 10 11 EDULE 20% 14% 19 12 [8829994 Igaz... 12 25 18 12 105 18 14 12 9 8 A corporation is evaluating the relevant cash flows for a capital budgeting decision and rest estimate the terminal cash flow The proposed machine will be disposed of at the end of is usable Me of five years at an estimated sale price of $15,000 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 $5.000 The fom 40 percent tax rate on ordinary income and long-term capital gain. The terminal cash flow is

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