A Hide Time Remaining A Question 1 of 2 75 Points Click to see additional instructions (15 points for each question) A firm is considering replacing an existing piece of equipment with a more sophisticated machine. The existing machine was purchased 3 years ago at an installed cost of $110,000: it was being depreciated under MACRS using a 5-year recovery period. The existing machine is expected to have a usable life of 5 more years. The new machine costs $150,000 and requires $20,000 in installation costs: It has a 5-year usable life and would be depreciated under MACRS using a 5-year recovery period. The firm can currently sell the existing machine for $80,000 without incurring any removal or cleanup costs. The firm is subject a 40% tax rate. The estimated earnings before depreciation, interest, and taxes over the 5 years for both the new and the existing grinder are shown in the following table. Year New Machine Existing Machine 1 180,000 $170,000 2 180.000 160,000 3 180,000 150,000 4 180.000 150.000 5 180,000 150,000 2 ON 5 year MACRS depreciation percentages Year Percentage 1 2 3 4 5 6 0.2 0.32 0.19 0.12 0.12 0.05 di Hide Time Remaining A 2 180.000 160,000 3 180.000 150.000 4 180,000 150.000 5 180,000 150,000 5 year MACRS depreciation percentages Year Percentage - Nino 0.2 0.32 0.19 0.12 0.12 0.05 a. Calculate the book value of the existing machine. $ b. Calculate the tax effect from the sale of the existing asset. $ C. Calculate the initial investment. $ d. Calculate the incremental CF at the end of year 1.5 e. Calculate the incremental CF at the end of year 2.5 Aramak iin buraya yazn A Hide Time Remaining A Question 1 of 2 75 Points Click to see additional instructions (15 points for each question) A firm is considering replacing an existing piece of equipment with a more sophisticated machine. The existing machine was purchased 3 years ago at an installed cost of $110,000: it was being depreciated under MACRS using a 5-year recovery period. The existing machine is expected to have a usable life of 5 more years. The new machine costs $150,000 and requires $20,000 in installation costs: It has a 5-year usable life and would be depreciated under MACRS using a 5-year recovery period. The firm can currently sell the existing machine for $80,000 without incurring any removal or cleanup costs. The firm is subject a 40% tax rate. The estimated earnings before depreciation, interest, and taxes over the 5 years for both the new and the existing grinder are shown in the following table. Year New Machine Existing Machine 1 180,000 $170,000 2 180.000 160,000 3 180,000 150,000 4 180.000 150.000 5 180,000 150,000 2 ON 5 year MACRS depreciation percentages Year Percentage 1 2 3 4 5 6 0.2 0.32 0.19 0.12 0.12 0.05 di Hide Time Remaining A 2 180.000 160,000 3 180.000 150.000 4 180,000 150.000 5 180,000 150,000 5 year MACRS depreciation percentages Year Percentage - Nino 0.2 0.32 0.19 0.12 0.12 0.05 a. Calculate the book value of the existing machine. $ b. Calculate the tax effect from the sale of the existing asset. $ C. Calculate the initial investment. $ d. Calculate the incremental CF at the end of year 1.5 e. Calculate the incremental CF at the end of year 2.5 Aramak iin buraya yazn