The terminal cash flow = [sales (salvage) price] − (tax rate) × [sales (salvage) price − book value] ± change in working capital. Here, = 10,000 − (0.40) × (10,000 − 0) − 15,000 (increased working capital is a use of funds) = 10,000 – 4,000 − 15,000 = −9,000. |
