calculate net Incremental Cash Flows for all of the years

Periodic cash inflows Scenic Tours, Inc., is a provider of bus tours throughout New England. The corporation is considering the replacement of 12 of its older buses. The existing buses were purchased 4 years ago at a total cost of $2,748,000 and are being depreciated using MACRS and a 5-year recovery period (see table ). The new buses would have larger passenger capacity and better fuel efficiency as well as lower maintenance costs. The total cost for 12 new buses is $3,049,000. Like the older buses, the new ones would be depreciated using MACRS and a 5-year recovery period. Scenic is subject to a tax rate of 21%. The following table presents revenues and cash expenses (excluding depreciation and interest) for the proposed purchase as well as the present fleet. Use all of the information given to calculate incremental (net) periodic cash flows for the proposed bus replacement. Year 2 4 5 6 $1,843 450 $1,847 462 $1,834 471 $1,826 476 $1,808 487 $1,800 502 With the proposed new buses (000) Revenue Expenses (exclud. deprec. and int.) With the present buses (000) Revenue Expenses (exclud. deprec. and int.) $1.794 507 $1,792 502 $1,786 512 $1.788 521 $1,766 523 $1,750 540 1 2 3 4 5 6 1847 1826 1843 1794 1834 1786 1800 1750 1792 1808 1766 42 1788 49 55 48 38 50 450 462 471 487 Incremental Periodic Cash Flows Particulars Revenues: (000) New buses (A) old buses (B) Incremental Revenue (C = A-B) Expenses: (000) New buses (D) Old buses (E) Incremental Expenses (F =D-E) Depreciation:(000) New buses (G) Old buses (H) Incremental Depreciation (I = G-H) Incremental Depreciation tax savings (J = 1*21%) Incremental Earnings K = (C-F)*(1-21%) Incremental Periodic Cash Flows (L = J+K) 476 521 507 502 512 523 502 540 -38 -57 -40 -41 -45 -36 609.8 329.76 280.04 58.8084 975.68 579.31 365.88 365.88 152.45 137.4 838.28 579.31 365.88 365.88 152.45 176.0388 121.6551 76.8348 76.8348 32.0145 75.05 70.31 65.57 61.62 69.52 251.0888 191.9651 142.4048 138.4548 101.5345 83.74 142.5484 Depreciation New buses = $3,049 * 20%,32%,19%,12%, 12%,5% Depreciation Old buses = $2,748 * 12%, 5% Year 1 S Net Incremental Cash Flows Cash flows: (000) Revenues Less: Change in expenses Less: Taxes @ 21% Depreciation tax savings Net operating cash inflows $ GA $ $