1.K&M Winery has an old wine press that the company wants to replace with a more efficient press. The new press costs $110,000 with an additional $10,000 in installation costs. The old press was purchased two years ago for a cost of $60,000 and $10,000 in installation costs. It can be sold for a price of $40,000 today. The old press was depreciated under the MACRS 3-year recovery schedule while the new press will be depreciated under the MACRS 5-year recovery schedule. K&M Winery projects revenues to be $250,000 more with the new press each year for the next three years. Expenses (excluding depreciation) are 80% of sales. The firm is in the 21% tax rate.

What is the operating cash flow for year 3? (Use negative for a cash outflow. Round to the nearest dollar and do not enter a dollar sign)

2. Stroms Drive-In is considering replacing its old projector with a new one. The old projector was being depreciated using MACRS (5 year class). Original installed cost was $10,000 four years ago and it can now be sold for $2,000. The new projector will cost $18,000 and will be depreciated using MACRS (5 year class). Reduced expenses of $5,000 per year will result because of decreased labor cost to run the projector. The firm is in the 21% tax bracket.

What is the operating cash flow for year 2? (Use negative for cash outflow. Round to the nearest dollar and do not enter a dollar sign)