a firm is considering renewing its equipment to medt jncreased demand for its product. the cose of equipment modificationd is 1.98 million plus 115,000 in installation costs. the firm will depreciate the equipment modifications under MARCS. using a 5 year recovery period. (see table) additional sales revenue from the renewal should amount to 1.12 million per year, and additional operating expenses and other costs (excluding depreciation and interest) will amoung to 35% of ghe additional sales. the firm is shbject to a take rate of 49%. (Note: answer the following questions for each of the next 6 years)

need calculations for years 2,3,4,5,6

UPSinar to) Incremental operating cash intlows Afum is considering runwing to ecument to meet increased demand for its product. The cost of upment molestions on 8.000 inch woment modifications under MACRS sing a year recovery period sebe Actional serverwal should wout $1.2 mio per year song depreciation and rest will amount to 5% of the store sales. The subject to the of 40% (Mole Answering questionnacha the years What otalaring before depreciation, and we will result from the wall What incrementale pering profits where with from the renewal c. What incremental perting shows will result from the wal? The more probeloreton and tax are 5728000 Round to the nearestor) Cathetering profits blow (Round to the door 1 Phot befortion and 5 728.000 Decreation 5 419.000 $ 500.000 135.400 Ron to the nearest Yea 1 De 1 5 End the One w ha on 10 axos 10 years ng renewing its equipment to meet increased demand for its product. The cost of equipment modifications is $1.98 million plus $ co * Data Table sta resu mt (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a Te $ spreadsheet.) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year Recovery year 3 years 5 years 7 years 128.00 33% 20% 14% 10% 419,00 2 45% 32% 25% 18% 309,00 15% 19% 18% 14% 7% 12% 12% 12% 123,60 12% 9% 9% 185,40 6 5% 9% 8% 7 9% 7% 4% 6% 9 6% 10 6% 4% Totals 100% 100% 100% 100% *These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year 1 3 4 5 8 2 11 convention Print Done click Check equipment modifications under depreciation and interest) will amount to 35% of the additional sales. The firm is subject to a tax rate of 40 a. What incremental earnings before depreciation, interest, and taxes will result from the renewal? b. What incremental net operating profits after taxes will result from the renewal? c. What incremental operating cash inflows will result from the renewal? a. The incremental profits before depreciation and tax are $ 728000. (Round to the nearest dollar.)