CASEI Original Machine Initial cost = 500,000 Annual depreciation = 60,000 Purchased 3 years ago Book Value = 320,000 Salvage today = 225,000 Salvage in 7 years = 80,000 New Machine Initial cost = 1,000,000 10-year life Salvage in 10 years = 120,000 Cost savings = 350,000 per year Working capital benefit $100,000 reduction in Inventory 5-year MACRS depreciation Required return = 12% Average Tax rate = 43% 5 Year MACRS Table Year Rate 20.00% 32.00% 19.20% 11.52% 11.52% 5.76% Create a 10 year pro forma considering the financial situation before the acquisition Create a 10 year pro forma after the acquisition Detail the Operating Cash Flow by year after the Acquisition Calculate the NPV, IRR, Payback and Discounted Payback