Can somebody explain to me what is the question asking for and why the answer are like this? besides, why the new depreciation is

49950 in year 1? It is asked to follow 3 years MACRS!? Did it follow?

Please explain as detail as possible,Thanks a lot!

Example 7.6 Consider a replacement problem. City Corporation has an old machine purchased (5 years / Jan Toil ago. The initial cost of this old machine is $100,000. The annual depreciation is $9.000 The salvage today is $65,000. If the machine is used for another 3 years, the salvage in 5 years will be $10,000. If City Corporation decides to replace the old machine, the new machine will cost $150,000 and is last for 5 years. Depreciation follows 3 year MACRS. Salvage in 5 years will be zero. This new machine helps saving $50,000 cost per year. The required return is 10% and the tax rate is 40% Should City Corporation replace the machine? Remember that we are interested in incremental cash flows. If we buy the new machine, then we will sell the old machine. First, we have to look at the cash flow consequences of selling the old machine today instead of in 5 years. Then, figure out the OCF. Year 1 50,000 Year 2 50,000 Year 3 50,000 Year 4 50,000 Year 5 50,000 Cost Saving Depreciation New - Old Incremental 49,950 9,000 40,950 66,750 9,000 57,750 22.200 9,000 13,200 11.100 9,000 2,100 0 9,000 -9,000 EBIT Tax (412) 9,050 3,620 5,430 -7,750 -3.100 -4,650 36,800 14,720 22,080 47,900 19,160 28,740 59.000 23,600 35,400 NI 46,380 OCF = NI + Dep 53,100 35,280 30,840 26,400 Second, we have to deal with the incremental net capital spending. Year 5 Year 0 - 150,000 61,000 - 10,000 Cost of New Machine After Tax Salvage (Old Machine) -Salvage - Tx (Salvage - Book Value) Incremental Net Capital Spending Third, we can compute the cash flow from assets. -89,000 -10.000 Second, we have to deal with the incremental net capital spending. Year 5 Year 0 - 150,000 61,000 -10,000 Cost of New Machine After Tax Salvage (Old Machine) = Salvage - Tx (Salvage - Book Value) Incremental Net Capital Spending -89,000 -10,000 Third, we can compute the cash flow from assets. 101 L Year 0 Year 1 46,380 Year 2 53,100 Year 3 35,280 Year 4 30,840 OCF NCS NWC -89,000 0 -89,000 Year 5 26,400 -10,000 0 16,400 46,380 53,100 35,280 30,840 99 Finally, we can compute the NPV and IRR based on the cash flows we have. 139 NPV = 54,801 TRR = 36 270%