TA, Inc. is considering replacing a piece of old equipment with a piece of new equipment. Details for both are given below:
Old Equipment New Equipment
Current BV=$1,500,000
Current MV=$2,500,000 Acquisition cost=$6,200,000
Remaining life=10 years Life=10 years
Annual sales=$350,000 Annual sales=$850,000
Cash operating ex.=$140,000 Cash operating ex.=$500,000
Annual depreciation=$180,000 Annual depreciation=$620,000
Accounting salvage value=$0 Accounting salvage value=$0
Exp. salvage value=$240,000 Exp. salvage value=$750,000
The new equipment will require an additional investment of $250,000 in working capital.
The tax rate is 35%.
TA's terminal year incremental after-tax non-operating cash flow is closest to:
