Click to see additional instructions Miller Corporation is considering replacing a machine. The replacement will reduce operating expenses (that is, increase earnings beforedepreciation, interest, and taxes) by $20,000 per year for each of the 5 years the new machine is expected to last. Although the old machine has zero book value, it can be used for 5 more years. The depreciable value of the new machine is 555,000. The firm will depreciate the machine under MACRS using a 5-year recovery and is subject to a 40% tax rate. Estimate the incremental operating cash inflows generated by the replacement. (Note: Be sure to consider the depreciation in year 6.) Year Incremental profits before depreciation and taxes Less: Depreciation Net profits before taxes Taxes Net profits after taxes Operating cash flows MACRS Recovery 5 Years Year 1 2 3 4 5 6 20% 32% 1996 1296 1296 5%