Incremental operating cash inowsiExpense reduction Miller Corporation is considering replacing a machine The replacement wili reduce operating expenses (that is increase earnings before depreciation' interest' and taxes) by $21 000 peryear for each of the 5' the new machine is expected to iasl Although the old machine has zero hookvalue' it can be used for 5 more years The depreciahle value of the new machine is $60000 The rm will depreciate the machine under MACRS using a 5-year recovery g and is subject to a tax rate Estimate the incrementai operating cash inows generated by the replacement (Note Be sure to consider the depreciation in year 6) Net plums oeiute sexes J, to uuu Taxes 3, 5,520 Data table Net prots after taxes $ 5250' Operating cash ows 3 i5 433' (Click on the icon here CI in order to copy the contents of the data tabie beiow into a spreadsheet ) Rounded Depreciation Percentages hy Recovery Year Using MACRS for Find The incremental operating cash inows generated by the replacement for year 5 below (Round to the nearest dollar , First Four Property Classes Net prots after taxes 5% Year 5 Percentage by recovery year" _ Recovery year 3 years 5 years 7 years 10 years Incremental expense sawan 55 21000 33% 20% 14% 10% 45% 32% 25% 13% incremental prots before depreciation and taxes $5 21390 15% may? 15.}? met, 7% E2% 12% 12% Less' Depreciation 35 7 200 9% 9% 9% Net prots before taxes 3 i3_800 5% 9% 8% 9% 7% 5 520 Taxes $ - 4% 6% $ 5,230 5% 1 Operating cash ows Find the incremental operating cash inows generated by the replacement for year 5 helow' (Round to the nearest dollar Year 6 Incremental expense savings Incremental prots before depreciation and taxes Less: Depreciation Net prots before taxes Taxes Net prots after taxes Operating cash ows 4% 100% 100% 100% 100% \"These percentages have been rounded to the nearest whole percent to simplify caiculations whiEe retaining realisni To calculate the actual depreciation fortax purposes be sure to apply the actual unrounded percentages ordirectly apply double-declining baiance (200%) depreciation using the hall-year convention