Topsider Inc. is considering the purchase of a new leather-cutting machine to replace an existing machine that has zero salvage value. The net salvage value of the new machine is $6,000 and the return of net working capital is $3,520. Which of the following is the terminal cash value of the new machine?
A) $6,000
B) $3,520
C) $9,520
D) $7,000
E) $3,000

Question

Quizplus · Accepted Answer

The terminal cash value of the new machine includes both the net salvage value of the machine and the return of net working capital. Therefore, the terminal cash value is $6,000 + $3,520 = $9,520. Choice C is the only option that matches this value.