Net cash flows$$Central Laundry and Cleaners is considering replacing an existing piece of machinery with a more sophisticated machine. The old machine was purchased $3$ years ago at a cost of $ $50$ comma $100$

$,$

and this amount was being depreciated under MACRS using a$5-$year recovery period. The machine has $5$ years of usable life remaining. The new machine that is being considered costs $ $75$ comma $500$

and requires $ $4$ comma $500$

in installation costs. The new machine would be depreciated under MACRS using a$5-$year recovery period. The firm can currently sell the old machine for $ $54$ comma $100$

without incurring any removal or cleanup costs. The firm is subject to a tax rate of $21\%$

$.$

The revenues and expenses$($excluding depreciation and$$ interest$)$ associated with the new and the old machines for the next $5$ years are

given in the table

LOADING...

$.$

$($Table

LOADING...

contains the applicable MACRS depreciation$$ percentages.$)$ Note: The

new machine will have no terminal value at the end of $5$ years.

a$.$ Calculate the initial cash flow associated with replacement of the old machine by the new one.

b$.$ Determine the periodic cash flows associated with the proposed replacement.$($Note: Be sure to consider the depreciation in year$6.)$

c$.$ Depict on a time line the net cash flows found in parts $($a$)$

and $($b$)$

associated with the proposed replacement decision.