Homework: Chapter 11 Homework Save Score: 0 of 1 pt 7 of 12 (0 complete) HW Score: 0%, 0 of 12 pts P11-16 (similar to) s Question Help Incremental operating cash inflows A firm is considering renewing its equipment to meet increased demand for its product. The cost of equipment modifications is $1.91 million plus $117,000 in installation costs. The firm will depreciate the equipment modifications under MACRS, using a 5-year recovery period (see table : ). Additional sales revenue from the renewal should amount to $1.11 million per year, and additional operating expenses and other costs (excluding depreciation and interest) will amount to 36% of the additional sales. The firm is subject to a tax rate of 40%. (Note: Answer the following questions for each of the next 6 years.) a. What incremental earnings before depreciation, interest, and taxes will result from the renewal? b. What incremental net operating profits after taxes will result from the renewal? Data Table x c. What incremental operating cash inflows will result from the renewal? a. The incremental profits before depreciation and tax are $ (Round to the nearest dollar.) 33% (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year* Recovery year 3 years 5 years 7 years 10 years 20% 14% 10% 2 45% 32% 25% 18% 3 15% 19% 18% 14% 4 7% 12% 12% 12% 5 12% 9% 9% 6 5% 9% 8% 7 9% 7% 8 4% 6% 9 6% 10 6% 11 4% Totals 100% 100% 100% 100% Enter your answer in the answer box and then click Check Answer. 12 parts remaining