Homework: HW8 Chapter 12 Save Score: 0 of 16 pts 1 of 4 (0 complete) HW Score: 0%, 0 of 66 pts P12-32 (algorithmic) Question Help (Replacement project cash flows) The Louisiana Land and Cattie Company (LL&CC) is one of the largest cattle buyers in the country. They have buyers at all the major cattle auctions throughout the southeastern part of the US who buy on the company's behall and then have the cattleshipped to Sulphur Springs, Louisiana, where they are sorted by weight and type before shipping off to food lots in the Midwest. The company has been considering the replacement of their tractor-trailer rigs with a newer, more fuel-efficient feet for some time, and a local Peterbilt dealer has approached the company with a proposal. The proposal would call for the purchase of 10 new rigs at a cost of $70,000 each. The rigs would be depreciated toward a salvage value of $38.000 over a period of 5 years. If LL&CC purchases the rigs, I will sell its existing fleet of 10 rigs to the Peterbe dealer for their current book value of $23.000 per unit. The existing fleet will be fully deprecated in 1 more year but is expected to be serviceable for 5 more years, at which time they would be worth only $5,000 per unit as scrap The new foot of trucks is much more fuel-efficient and will require only $170,000 in fuel costs compared to $280.000 for the existing fleet in addition, the new feet of trucks will require minimal maintenance over the next 5 years, equal to an estimated $110,000 compared to almost $370,000 per year that is currently being spent to keep the older fleet running a. What are the differential operating cash flow savings per year during years 1 through 5 for the new floor? The firm pays taxes at a marginal tax rate of 29 percent b. What is the initial cash outlay required to replace the existing feet with new rigs? c. Sketch a timeline for the replacement project cash flows for years through 5. d. If LLSCC requires a discount rate of 9 percent for new investments, should the foot be replaced? a. Find the differential operating cash flow savings per year during years 1 through 4 for the new foot (Round to the nearest dollar) Cash Flow Value Year 1 Year 2 Enter your answer in the edit fields and then click Check Answer Check Answer 4 A parts remaining