Operating cash flows Richard and Linda Thomson operate a local lawn maintenance service for commercial and residential property. They have been using a John Deere riding mower for the past several years and believe that it is time to buy a new one. They would like to know the operating cash flows associated with the replacement of the old riding mower. The following data are available. 1. There are 5 years of remaining useful life on the old mower. 2. The old mower has a zero book value. 3. The new mower is expected to last 5 years. 4. The Thomsons will follow a 5-year MACRS E recovery period for the new mower. 5. Depreciable value of the new lawn mower is $1,720. 6. They are subject to a 40% tax rate. 7. The new mower is expected to be more fuel-efficient, maneuverable, and durable than the previous models and can result in reduced operating expenses of $483 per year. 8. The Thomsons will buy a maintenance contract that calls for annual payments of $113. Create an operating cash flow statement for the replacement of Richard and Linda's John Deere riding mower. Show the operating cash flow for the next 6 years. Replacement of John Deere Riding Mower Data table Year 1 $ $ $ Savings from new and improved mower Less: Annual maintenance cost Less: Depreciation Savings (loss) before taxes Taxes (40%) Savings (loss) after taxes 3 years 33% 45% 15% 7% 5 years 20% 32% 19% 12% 12% 5% $ Lecovery year 1 2 3 4 5 6 7 8 9 10 11 Totals 7 years 14% 25% 18% 12% 9% 9% 9% 4% $ $ 10 years 10% 18% 14% 12% 9% 8% 7% 6% 6% 6% 4% 100% $ Incremental operating cash flow Clear all Check answer 100% 100% 100%