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Mom s Cookies, Inc., is considering the purchase of a new cookie oven. The original cost of the old oven was $ 4 5 ,
Moms Cookies, Inc., is considering the purchase of a new cookie oven. The original cost of the old oven was $; it is now five years old, and it has a current market value of $ The old oven is being depreciated over a year life toward a zero estimated salvage value on a straightline basis, resulting in a current book value of $ and an annual depreciation expense of $Mom's Cookies, Inc., is considering the purchase of a new cookie oven. The original cost of the old oven was $; it
is now five years old, and it has a current market value of $ The old oven is being depreciated over a year life
toward a zero estimated salvage value on a straightline basis, resulting in a current book value of $ and an annual
depreciation expense of $ The old oven can be used for six more years but has no market value after its
depreciable life is over. Management is contemplating the purchase of a new oven whose cost is $ and whose
estimated salvage value is zero. Expected beforetax cash savings from the new oven are $ a year over its life, you
can use bonus depreciation on the oven, and the cost of capital is percent. Assume a percent tax rate.
What will the cash flows for this project beNote that the $ cost of the old oven is depreciated over ten at
$ per year. The halfyear convention is not used for the old oven. Negative amounts should be indicated by a
minus sign. Do not round intermediate calculations and round your answers to decimal places. Goes to year
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