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I need complete workings to be shown. Also, show the working of depreciation. CellU, a subsidiary of CompU, is looking to replace one of the

I need complete workings to be shown. Also, show the working of depreciation.

CellU, a subsidiary of CompU, is looking to replace one of the machines they use to manufacture cell phones with a new, more efficient model. The installed cost of the new machine less what they can sell the old machine for is $12,190. The current machine cost $7,500, is three years old, and is depreciated using the MACRS 3-year recovery period (33%, 45%, 15%, 7%). The expected life of the new machine is 3 years, is depreciated using the MACRS 3-year recovery period, and will reduce annual labor expenses from $10,000 to $4,000. The firm has a marginal tax rate of 40 percent.

a. Calculate the annual incremental operating cash flows for the new machine

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