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.

There are $5$ years of remaining useful life on the old mower.

The old mower has a zero book value.

The new mower is expected to last $5$ years.

The Thomsons will follow a $5-$year MACRS $$ recovery period for the new mower.

Depreciable value of the new lawn mower is $$1,800.$

They are subject to a $32\%$ tax rate.

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 $$484$ per year.

The Thomsons will buy a maintenance contract that calls for annual payments of $$127.$

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.

Data table

Calculate the incremental operating cash flow statement below:

Richard and Linda Thomson

Incremental Operating Cash Flows

Replacement of John Deere Riding Mower

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