ch 11 #3

Incremental operating cash flows Richard and Linda Thomson operate a local lawn maintenance service for commercial and residential property. They have been using a John Deere riding mower for the past several years and believe that it is time to buy a new one They would like to know the incremental (relea cash faws associated with the replacement of the old riding mower The follwing data ae available 1 There are 5 years of remaining useful life on the old mower. 2. The old mower has a zero bock value J. The new mower is expected to last years 4. The Thomsons vwill follow a 5-year MACRS EEB recovary pariod for the new mower 5. Depreciable value of the new lawn mower is 31,700 6. They are subject to a 40% tax rate 7. Tha new mower is axpected to be more fuel-efficient, maneuvarable, and will raquire less maintenance than the previous models which should result in reducad operating expenses of 5490 per year 8. The Thomsons will buy a maintenance contrac: that calls for annual payments of 3119 for the expected life of the mower Create an incremental operating cash flow statement for the replacement of Richard and Linda's John Deere riding mower. Show the incremental operating cash flow for the next 6 years