Operating cash inflows A firm is considering renewing its equipment to meet increased demand for its product. The cost of equipment modifications is $$1\mathrm{.}95$ million plus $$110,000$ in installation costs. The firm will depreciate the equipment modifications under MACRS, using a $5-$year recovery period $($see table $).$ Additional sales revenue from the renewal should amount to $$1\mathrm{.}11$ million per year, and additional operating expenses and other costs $($excluding depreciation and interest$)$ will amount to $40\%$ of the additional sales. The firm is subject to a tax rate of $40\%.($Note: Answer the following questions for each of the next $6$ years.$)$

a$.$ What incremental earnings before depreciation, interest, and taxes will result from the renewal?

b$.$ What incremental net operating profits after taxes will result from the renewal?

c$.$ What incremental operating cash inflows will result from the renewal?

a$.$ The incremental profits before depreciation and tax are $$.($Round to the nearest dollar.$)$

Data table

$($Click on the icon located on the top$-$right corner of the data table below in order to copy its contents into a spreadsheet.$)$

Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes

$\backslash$table$[[,$Percentage by recovery year$*],[$Recovery year,$3$ years,$5$ years,$7$ years,$10$ years$],[1,33\%,20\%,14\%,10\%$