Five years ago, your company purchased a machine used in manufacturing for $110,000. You have learned that a new machine is available that offers many advantages; you can purchase it for $150,000 today. It will be depreciated on a straight-line basis over ten years and has no salvage value.

You expect that the new machine will reduce the current investment in working capital by $10,000.

The current machine is being depreciated on a straight-line basis over a useful life of 11 years and has no salvage value. The current market value of the old machine is $50,000 Your company's tax rate is 45%, and the opportunity cost of capital for this type of equipment is 10%.

Required:

1. Tax loss or gain on the selling the old plant.
2. The initial cash flow on the new plant.
3. Incremental depreciation expenses which can be claimed for the taxes