Cash Flow Years (new) proposed machine Year 1 Year 2 Year 3 Ownership Years New Machine Year 1 Year 2 Year 3 Earnings before depr. and int. and taxes $105,000 $110,000 $120,000 -Depreciation $32,000 $51,200 $30,400 IT Earnings before interest and taxes $73,000 $58,800 $89.600 - Taxes $29.200 $23.520 $35.840 Net operating profits after taxes $43,800 $35,280 $53,760 + Depreciation $32.000 $51.200 $30.400 Operating cash flows $75.800 $86.480 $84,160 Cash Flow Years - present (old) machine Year 1 Year 2 Year 3 Ownership Years Old Machine Year 4 Year 5 Year 6 Earnings before depr. and int. and taxes $95,000 $95,000 $95,000 -Depreciation $14.400 $14.400 $6.000 Earnings before interest and taxes $80,600 $80,600 $89,000 - Taxes $32.240 $32.240 $35.600 Net operating profits after taxes $48,360 $48,360 $53,400 + Depreciation $14.400 $14.400 Operating cash flows $6.000 The last three $62,760 $62.760 Depreciation Years $59.400 periods