Integrative Determining relevant cash flows Lombard Company is contemplating the purchase of a new high-speed widget grinder to replace the existing grinder. The existing grinder was purchased 2 years ago at an installed cost of $55.000, it was being depreciated under MACRS using a 5 year recovery period. The existing grinder is expected to have a table ide of 5 more years. The new grinder costs $103,300 and requires 55,400 in installation costs, it has a 5-year usable life and would be depreciated under MACRS using a 5-year recovery period Lombard can currently sell the existing grinder for $69.200 without incurring any removal or cleanup cost. To suppon the Increased business resulting from purchase of the new grinder accounts receivable would increase by 540,400, inventories by $20.700, and accounts payable bay S7 800. At the end of 5 years the existing grinder would have a market value of zero the new grinder would be sold to net 529.900 after removal and cleanup costs and before them. The firm is subject a 40% tax rate. The estimated earnings before depreciation Interest, and tam over the 5 years for both the new and the existing prindere shown in the following table (Tabien contain the applicable MACRS depreciation percentages) a. Calculate the initial investment associated with the replacement of the existing grinder by the now on b. Determine the operating cash inflows associated with the proposed grinder replacement (Note: Be sure to consider the depreciation in year 6.) c. Determine the terminal cash flow expected at the end of year 5 from the proposed grinder replacement d. Depict on a timeline the relevant cash flows associated with the proposed grinder replacement decision Data table - X he es re ps (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Earnings before depreciation, interest, and taxes Year New grinder Existing grinder 1 $42,600 $26,600 2 42,600 24,600 42,600 22,600 4 42,600 20,600 5 42,600 18,600 C Print Done Data table 3 years (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 5 years 7 years 10 years 1 33% 20% 14% 10% 45% 32% 25% 18% 15% 19% 18% 14% 7% 12% 12% 12% 12% 9% 9% 5% 9% 8% 9% 7% 4% 6% 6% 6% 10 4% 11 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 OWN