Find the terminal cash flow

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Reference no: EM132073901

Riverview Company is evaluating the proposed acquisition of a new production machine. The machine's base price is $200,000, and installation costs would amount to $28,000. Also, $10,000 in net working capital would be required at installation.

The machine will be depreciated for 3 years using simplified straight line depreciation. The machine would save the firm $110,000 per year in operating costs.

The firm is planning to keep the machine in place for 2 years. At the end of the second year, the machine will be sold for $100,000.

Riverview has a cost of capital of 12% and a marginal tax rate of 34%. I can do everything but I need help finding the terminal cash flow!!

Reference no: EM132073901

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