Chapter 12 - EOC Questions (CNOW) Questions Problem 12.19 (Replacement Analysis) Question 10 of 11 8. Check My Work (1 remaining) 9. 10. ER eBook 11. The Darlington Equipment Company purchased a machine 5 years ago, prior to the TCJA, at a cost of $95,000. The machine had an expected life of 10 years at the time of purchase, and it is being depreciated by the straight-line method by $9,500 per year. If the machine is not replaced, it can be sold for $10,000 at the end of its useful life. A new machine can be purchased for $180,000, including installation costs. During its 5-year life, it will reduce cash operating expenses by $60,000 per year. Sales are not expected to change. At the end of its useful life, the machine is estimated to be worthless. The new machine is eligible for 100% bonus depreciation at the time of purchase. The old machine can be sold today for $55,000. The firm's tax rate is 25%. The appropriate WACC is 9%. considered? Cash outflow should be indicated by minus sign. Round your answer a. If the new machine is purchased, what is the amount of the initial cash flow at Year 0 after bonus depreciation to the nearest dollar. $ 135000 X b. What are the incremental cash flows that will occur at the end of Years 1 through 5? Round your answers to the nearest dollar Year 1 Year 2 Year 4 Year 5 $ $ $ X Year 3 C. What is the NPV of this project? Do not round Intermediate calculations. Round your answer to the nearest cent. $ Should Darlington replace the old machine? Yes Hide Feedback Partially Correct Check My Work (1 remaining)