Incremental operating cash inflows-Expense reduction Miller Corporation is considering replacing a machine. The replacement will reduce operating expenses (that is, increase earnings before depreciation, interest, and taxes) by $22,000 per year for each of the 5 years the new machine is expected to last. Although the old machine has zero book value, it can be used for 5 more years. The depreciable value of the new machine is $44,000. 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 consider the depreciation in year 6.) Data table Find the incremental operating cash inflows generated by the replacement for year 1 below: (Roun (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Year 1 Incremental expense savings $ 22,000 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 10 years Incremental profits before depreciation and taxes $ 1 33% 20% 14% 10% Less: Depreciation 2 45% 32% 25% 18% 3 15% 19% 18% 14% Net profits before taxes 4 7% 12% 12% 12% Taxes 5 12% 9% 9% 6 5% 9% 8% Net profits after taxes $ 7 9% 7% Operating cash flows $ 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