Homework Answers
Option 5: $53000
Salvage value after taxes (Cash inflow) = selling price- tax rate *(selling price-book value)
= 50000-40%*(50000-30000)
= 42000
Lost sale on old machine (opportunity cost) = 15000*(1-40%) = 9000
NWC decrease (Cash inflow) = 20000
Terminal cash flow = 42000-9000+20000 = 53000
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