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 $58,100; it was being depreciated under MACRS using a 5-year recovery period. The existing grinder is expected to have a usable life of 5 more years. The new grinder costs $107.700 and requires $4,800 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 $69,800 without incurring any removal or cleanup costs. To support the increased business resulting from purchase of the new grinder, accounts receivable would increase by $40,900, inventories by $30, 100, and accounts payable by $57,700. At the end of 5 years, the existing grinder would have a market value of zero; the new grinder would be sold to net $28,500 after removal and cleanup costs and before taxes. The firm is subject a 40% tax rate. The estimated earnings before depreciation, interest, and taxes over the 5 years for both the new and the existing grinder are shown in the following table (Table contains the applicable MACRS depreciation percentages.) a. Calculate the initial investment associated with the replacement of the existing grinder by the new one. a. Calculate the initial investment associated with replacement of the old machine by the new one. Time Rema 6 of 44 (22 complete) A Data Table in order to copy the contents of the data table below (Click on the icon here into a spreadsheet.) O wi ase hew Hepre Jable Year reciati Earnings before depreciation, interest, and taxes New grinder Existing grinder $43,000 $26,900 43,000 24,900 43,000 22,900 43,000 20,900 43,000 18,900 GAWN- Print Done fields and then continue to the next question. Data Table 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 10 years 33% 20% 14% 10% 45% 25% 18% 19% 18% 14% 7% 12% 12% 12% 12% 9% 9% 9% 8% 7% 4% 6% WN - 32% 15% 5% 9% A Print Done