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Hello, Please help with this! Strong Tool company has been considering purchasing a new lathe to replace a fully depreciated lathe hat will last 5
Hello, Please help with this!
Strong Tool company has been considering purchasing a new lathe to replace a fully depreciated lathe hat will last 5 more years. The new lathe is expected to have a 5-year life and depreciation charges of $2, 020 in Year 1, $3, 232 in Year 2, $1, 919 in Year 3, $1, 212 in both year 4 and year 5, and $505 in Year 6. The firm estimates the revenues and expenses (excluding depreciation) for the new and the old lathes to be as shown in the following table. The firm is subjected to a 40% tax rate on ordinary income. a. Calculate the operating cash inflows associated with each lathe. b. Calculate the incremental (relevant) operating cash inflows resulting from the proposal lathe replacement. c. Calculate the operating cash inflows associated with the new lathe below: (Round to the nearest dollar.)Step by Step Solution
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