Chapter 12 Assignment Help Save&Exit Submit Seved Check my work 10 Assume that it is January 1, 2019, and that the Mendoza Company is considering the replacement of a machine that has been used for the past 3 years in a special project for the company. This project is expected to continue for an additional 5 years (.e, until the end of 2023). Mendoza will either keep the existing machine for another 5 years (8 years tota) or replace the existing machine now with a new model that has a 5-year estimated life. Pertinent facts regarding this decision are as follows oeaits tes 0.25 points Keep Exiating ew Machine Purchase price of aachine (Including transportation 170,000 5 22,000 50.45 5210,000 27,000 5 0.39 charges, etc. useful life (determined at time of acquisition) tstinated salvage value, end of 2023 Expected cash cperating cost8, per year: 8 years 5 years Varlable (per unit prodaced/sold) Fixed coats total 27, 000 26,000 January1, 2019 70, 000 December 31, 2023 15,000 26,000 Set working capital comdsted at tine of acquiaition of Increneatal net workiag capital required it ew machine Expected annual volune of output/sales (in units), over ex ting machine (a1 fully recovered at end of project, Decenber 31, 2023) 32, 000 is purahased on January1, 2019 (ai1 Lully recovered at end of 12, 000 the perlod 2019-2023 20, 000 20,000 Note: These amounts are used for depreclation calculations Assume further that Mendoza is subject to a 40% income tax, both for ordinary income and gansiosses associated with disposal of machinery, and that all cash flows occur at the end of the year, except for the initial Investment. Assume that straight-line depreciation s used for tax purposes and that any tax assoclated with the disposal of machinery occurs at the same time of the related transaction. Required: 1. Determine relevant cash flows (after-tax) at time of purchase of the new machine (e.time 0: January 1,2019). 2. Determine the relevant (after-tax) cash inflow each year of project operation e, at the end of each of years 1 through S) 3. Determine the relevant (after-tax) cash inflow at the end of the project's life (e., at the project's disposal time, December 31, 2023]. 5. Determine the undiscounted net cash flow (ater tax) for the new machine and determine whether on this basis the old machine should be replaced. (For all requirements, do not round intermediate calculations. round your answers to the nearest whole dollar amount) 1. Not cash fow (after-tax), time 0 (io, at purchase point) 2. Net cash inflow (after-tax), during the project aperation 3. Not cash inflow (aftor-tax), at the end of the project's ife 5 Undiscounted net cash flow (after tax) for the new machine Chapter 12 Assignment Help Save&Exit Submit Seved Check my work 10 Assume that it is January 1, 2019, and that the Mendoza Company is considering the replacement of a machine that has been used for the past 3 years in a special project for the company. This project is expected to continue for an additional 5 years (.e, until the end of 2023). Mendoza will either keep the existing machine for another 5 years (8 years tota) or replace the existing machine now with a new model that has a 5-year estimated life. Pertinent facts regarding this decision are as follows oeaits tes 0.25 points Keep Exiating ew Machine Purchase price of aachine (Including transportation 170,000 5 22,000 50.45 5210,000 27,000 5 0.39 charges, etc. useful life (determined at time of acquisition) tstinated salvage value, end of 2023 Expected cash cperating cost8, per year: 8 years 5 years Varlable (per unit prodaced/sold) Fixed coats total 27, 000 26,000 January1, 2019 70, 000 December 31, 2023 15,000 26,000 Set working capital comdsted at tine of acquiaition of Increneatal net workiag capital required it ew machine Expected annual volune of output/sales (in units), over ex ting machine (a1 fully recovered at end of project, Decenber 31, 2023) 32, 000 is purahased on January1, 2019 (ai1 Lully recovered at end of 12, 000 the perlod 2019-2023 20, 000 20,000 Note: These amounts are used for depreclation calculations Assume further that Mendoza is subject to a 40% income tax, both for ordinary income and gansiosses associated with disposal of machinery, and that all cash flows occur at the end of the year, except for the initial Investment. Assume that straight-line depreciation s used for tax purposes and that any tax assoclated with the disposal of machinery occurs at the same time of the related transaction. Required: 1. Determine relevant cash flows (after-tax) at time of purchase of the new machine (e.time 0: January 1,2019). 2. Determine the relevant (after-tax) cash inflow each year of project operation e, at the end of each of years 1 through S) 3. Determine the relevant (after-tax) cash inflow at the end of the project's life (e., at the project's disposal time, December 31, 2023]. 5. Determine the undiscounted net cash flow (ater tax) for the new machine and determine whether on this basis the old machine should be replaced. (For all requirements, do not round intermediate calculations. round your answers to the nearest whole dollar amount) 1. Not cash fow (after-tax), time 0 (io, at purchase point) 2. Net cash inflow (after-tax), during the project aperation 3. Not cash inflow (aftor-tax), at the end of the project's ife 5 Undiscounted net cash flow (after tax) for the new machine