Big-Pear Corp. is considering replacing its existing equipment that is used to produce smart cell phones. This existing equipment was purchase 2 years ago at a base price of $60. Installation costs at the time for the machine were $7. The existing equipment is considered a 5-year class for MACRS. The existing equipment can be sold today for $60 and for $20 in 4 years. The new equipment has a purchase price of $110 and is also considered a 5-year class for MACRS. Installation costs for the new equipment are $7. The estimated salvage value of the new equipment in year 4 is $70. This new equipment is more efficient than the existing one and thus savings before taxes using the new equipment are $17 a year. Due to these savings, inventories will see a one time reduction of $3 at the time of replacement. The company's marginal tax rate is 20% and the cost of capital is 12%. For this project, what is the incremental cash flow in year 3? MACRS Fixed Annual Expense Percentages by Recovery Class Year 1 2 3 4 3-Year 33.33% 44.45% 14.81% 7.41% 5-Year 20.00% 32.00% 19.20% 11.52% 11.52% 5.76% 7-Year 14.29% 24.49% 17.49% 12.49% 8.93% 8.93% 5 10-Year 10.00% 18.00% 14.40% 11.52% 9.22% 7.37% 6.55% 6.55% 6.56% 6.55% 3.28% 6 8.93% 7 8 4.45% 15-Year 5.00% 9.50% 8.55% 7.70% 6.93% 6.23% 5.90% 5.90% 5.91% 5.90% 5.91% 5.90% 5.91% 5.90% 5.91% 2.95% 9 10 11 12 13 14 15 16 For your answer, round to the nearest $.01, do not enter the $ sign and use a negative sign in front of first number is the cash flow is negative (do not use parenthesis to indicate negative cash flows). For example, if your answer is $34.32 then enter 34.32. If your answer is -$12.25 then enter - 12.25 not (12.25). For this project, the incremental cash flow in year 3 is: Your