compute the ordinary income and capital gains

QUESTION 27 5 points Saved Table 11.4 Facts Degnan Dance Company, Inc., a manufacturer of dance and exercise apparel, is considering replacing an existing piece of equipment with a more sophisticated machine. The following information is given. Existing Machine Proposed Machine Cost - $100,000 Cost-$150,000 Purchased 2 years ago Installation - $20,000 Depreciation using MACRS over Deprecation--the MACRS a 5-year recover schedule 5-year recovery schedule will be used Current market value - $105,000 Five year usable life remaining Five year usa ble life expected Emnings before Depreciation and Taxes Existing Machine Proposed Machine Year 1 $160,000 Year 1 $170,000 150,000 170,000 140,000 170,000 140,000 170,000 5 140,000 170,000 2 3 4 2 3 4 5 The firm pays 40 percent taxes on ordinary income and capital gains. Given the information in Table 11.4, compute the incremental annual cash flows. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac)