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help with B Operating cash inflows A firm is considering renewing its equipment to meet increasod demand for its prodict. The cost of equipment modifications
help with B
Operating cash inflows A firm is considering renewing its equipment to meet increasod demand for its prodict. The cost of equipment modifications is 51.98 milion plus $105,000 in instalation costs. The firm will depreciate the equipment modfications under MACRS, using a 5 year recovery period (see table [IIB). Additional sales revenue from the renewal should amount to $122 million per year, and additional operating expenses and other costs (excluding depreciation and interest) will amount to 39% of the additonal sales. The firm is subject to a tix rate of 40%. (Nofe Answer the following quesbons for each of the next 6 years ) a. What incremental eamings bofore depreciation, interest, and twoes will result from the renewal? h. What incremontal not noeration nofits affer taxos will repult from tha mnewal? a. The incremental profits before depreciation and tax ares (Round to the nearest dollar) b. Calculate the incremental net operating profits affer taxes below. (Round to the nearest dollar) Data table Step by Step Solution
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