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 21% tax rate. Calculate the initial cash flow associated with the proposed purchase of a new grading machine. Total cost of the new machine: $ Book Value of old asset: $ Tax on the sale of old asset: $ After tax proceeds from the old asset: $ Initial Investment: $ MACRS Recovery Year 5 Years 1 20% 2 3 32% 19% 4 12% 12% 5 6 5%