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 $64,300; it was being depreciated straight-line for 5 years. The existing grinder is expected to have a usable life of 5 more years. The new grinder costs $105,600 and requires $5500 in installation costs; it has a 5-year usable life andwould be depreciated on a straight-line basis. Lombard can currently sell the existing grinder for $70,900 without incurring any removal or cleanup costs. To support the increased business resulting from purchase of the new grinder, accounts receivable would increase by $40,600, inventories by $30,300, and accounts payable by $58,500. At the end of 5 years, the existing grinder would have a market value of zero; the new grinder would be sold to net $28,900 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 Year New grinder Existing grinder 1 $43,500 $25,800 2 43500 23800 3 43500 21800 4 43500 19800 5 43500 17800