Incremental operating cash inflows A firm is considering renewing its equipment to meet increased demand for its product. The cost of equipment modifications is $1.87 million plus $115,000 in installation costs. The firm will depreciate the equipment modifications under MACRS, using a 5-year recovery period (see table EB. Additional sales revenue from the renewal should amount to S1.11 milion per year, and additional operating expenses and other costs (excluding reciation and interest will amount to 36 of the additional sales. The firm is subyect to a tax rate o, 40% a. What incremental eamings before depreciation, interest, and taxes will result from the renewal? b. What incremental net operating profits after taxes will result from the renewal? c. What incremental operating cash inflows will result from the renewal? Note: Answer lhe follo ing questions lor each of the next 6 yea a. The incremental profits before depreciation and tax are (Round to the nearest dollar.) Data Table 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* 5 years 3 years 33% 45% 15% 10 years 10% 18% Recovery year years 14% 25% 18% 12% 9% 9% 9% 4% 19% 12% 12% 5% 12% 8% 6% Enter your answer in the answer box and then click Check Answer. 6% 4% 100% 10 12 Peataining Totals 100% 100% 100%