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Holmes Manufacturing is considering a new machine that costs $250,000 and would reduce pretax manufacturing costs by $90,000 annually. Holmes would use the 3-year MACRS

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Holmes Manufacturing is considering a new machine that costs $250,000 and would reduce pretax manufacturing costs by $90,000 annually. Holmes would use the 3-year MACRS method to depreciate the machine, and management thinks the machine would have a value of $23,000 at the end of its 5-year operating life. The applicable depreciation rates are 33%, 45%, 15%, and 7%, as discussed in Appendix 12A. Net operating working capital would increase by $25,000 initially, but it would be recovered at the end of the project's 5-year life. Holmes's marginal tax rate is 40%, and a 10% WACC is appropriate for the project. ASSUME that the depreciation of the new machine is straight-line over its five year life (and NOT MACRS as given in the question). What is the incremental cash flow in year 0? What is the incremental cash flow for periods 1, 2, 3 and 4? What is the after-tax value of the salvage in year 5?What is the total incremental cash flow in Year 5

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