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NBC is contemplating the replacement of one of its machines with a new one that will increase revenue from $10,000 to $30,000 per year and
NBC is contemplating the replacement of one of its machines with a new one that will increase revenue from $10,000 to $30,000 per year and reduce cash operating costs from $8,000 to $5,000 per year. The new machine will cost $25,000 and have an estimated life of 5 years with salvage value of $2,000. The firm uses straight-line depreciation and is subject to a 30 percent tax rate. The old machine has been fully depreciated and has no salvage value. What is the incremental (relevant) cash inflows generated by the replacement?
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