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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 2 , 0
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 years 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.
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