Click to see additional instructions Cushing Corporation is considering the purchase of a new grading machine to replace the existing one. The existing machine was purchased 4 years ago at an installed cost of $19.000: it was being depreciated under MACRS using a 5-year recovery period (See the table below for percentages). The existing machine is expected to have a usable life of at least 5 more years. The new machine costs $34.300 and requires $5.400 in installation costs: it will be depreciated using a 5-year recovery period under MACRS The existing machine can currently be sold for $24.600 without incurring any removal or cleanup costs. The firm is subject to a 2196 tax rate. Calculate the initial cash flow associated with the proposed purchase of a new grading machine. Total cost of the new machines Book Value of old asset: 5 Tax on the sale of old assets After tax proceeds from the old asset: S Initial Investments MACRS Recovery 5 Years Year 1 20% 3 329 3 19% 4 12% 5 129 6 5%