Incremental operating cash

inflowslong dashExpense

reduction Miller Corporation is considering replacing a machine. The replacement will reduce operating expenses (that is, increase earnings before depreciation, interest, and taxes) by

$ 23 comma 000$23,000

per year for each of the

55

years the new machine is expected to last. Although the old machine has zero book value, it can be used for

55

more years. The depreciable value of the new machine is

$ 60 comma 000$60,000.

The firm will depreciate the machine under MACRS using a

55 -year

recovery

LOADING...

and is subject to a

40 %40%

tax rate. Estimate the incremental operating cash inflows generated by the replacement. (Note: Be sure to consider the depreciation in year 6.)