Incremental operating cash inflows-Expense reduction Miller Corporation is considering replacing a machine. The replacement will reduce operating expenses (that is increase camingo before depreciation, interest and taxes) by $23,000 per year for each of the years the new machine is expected to last. Although the old machine has zero book value, it can be used for more years. The depreciable value of the new machine le $45,000. The firm will depreciate the machine under MACRS using a 5-year recovery and is subject to a 40% tax rate Estimate the incremental operating cash inflows generated by the replacement. (Note: Be sure to contider the depreciation in year 6.) (Click on the icon here in order to copy the contents of the data table below 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 1 10 years 33% 20% 2 14% 10% 45% 32% 25% 3 18% 15% 19% 18% 4 14% 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% *These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year convention