b. Calculate the incremental (relevant) operating cash inflows resulting from the proposed lathe replacement. Calculate the incremental (relevant) operating cash inflows resulting from the proposed lathe replacement below: (Round to the nearest dollar.) Year New Lathe A Old Lathe A A Incremental Cash Flows (Round to the nearest dollar.) Year New Lathe Old Lathe Incremental Cash Flows $ (Round to the nearest dollar.) Year New Lathe A Old Lathe A Incremental Cash Flows Incremental operating cash inflows Strong Tool Company has been considering purchasing a new lathe to replace a fully depreciated lathe that will last 5 more years. The new lathe is expected to have a 5-year life and depreciation charges of $2,120 in Year 1; $3,392 in Year 2; $2,014 in Year 3; $1,272 in both Year 4 and Year 5. The firm estimates the revenues and expenses (excluding depreciation) for the new and the old lathes to be as shown in the following table . The firm is subject to a 40% tax rate on ordinary income. a. Calculate the operating cash inflows associated with each lathe. b. Calculate the incremental (relevant) operating cash inflows resulting from the proposed lathe replacement. c. Depict on a time line the incremental operating cash inflows calculated in part b. a. Calculate the operating cash inflows associated with the new lathe below: (Round to the nearest dollar.) Year Revenue 41500 Expenses (excluding depreciation and interest) Profit before depreciation and taxes Depreciation Net profit before taxes 29800 11700 2120 9580 Taxes 3832 Net profit after taxes 5748 7868 Operating cash flows (Round to the nearest dollar.) Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Year AWN + Revenue $41,500 42,500 43,500 44,500 45,500 New Lathe Expenses (excluding depreciation and interest) $29,800 29,800 29,800 29,800 29,800 Revenue $35,700 35,700 35,700 35,700 35,700 Old Lathe Expenses (excluding depreciation and interest) $24,000 24,000 24,000 24,000 24,000 b. Calculate the incremental (relevant) operating cash inflows resulting from the proposed lathe replacement. Calculate the incremental (relevant) operating cash inflows resulting from the proposed lathe replacement below: (Round to the nearest dollar.) Year New Lathe A Old Lathe A A Incremental Cash Flows (Round to the nearest dollar.) Year New Lathe Old Lathe Incremental Cash Flows $ (Round to the nearest dollar.) Year New Lathe A Old Lathe A Incremental Cash Flows Incremental operating cash inflows Strong Tool Company has been considering purchasing a new lathe to replace a fully depreciated lathe that will last 5 more years. The new lathe is expected to have a 5-year life and depreciation charges of $2,120 in Year 1; $3,392 in Year 2; $2,014 in Year 3; $1,272 in both Year 4 and Year 5. The firm estimates the revenues and expenses (excluding depreciation) for the new and the old lathes to be as shown in the following table . The firm is subject to a 40% tax rate on ordinary income. a. Calculate the operating cash inflows associated with each lathe. b. Calculate the incremental (relevant) operating cash inflows resulting from the proposed lathe replacement. c. Depict on a time line the incremental operating cash inflows calculated in part b. a. Calculate the operating cash inflows associated with the new lathe below: (Round to the nearest dollar.) Year Revenue 41500 Expenses (excluding depreciation and interest) Profit before depreciation and taxes Depreciation Net profit before taxes 29800 11700 2120 9580 Taxes 3832 Net profit after taxes 5748 7868 Operating cash flows (Round to the nearest dollar.) Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Year AWN + Revenue $41,500 42,500 43,500 44,500 45,500 New Lathe Expenses (excluding depreciation and interest) $29,800 29,800 29,800 29,800 29,800 Revenue $35,700 35,700 35,700 35,700 35,700 Old Lathe Expenses (excluding depreciation and interest) $24,000 24,000 24,000 24,000 24,000
