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Operating cash inflows Strong Tool Company has been considering purchasing a new lathe to replace a tully depreciated lathe that would otherwise last 5 more
Operating cash inflows Strong Tool Company has been considering purchasing a new lathe to replace a tully depreciated lathe that would otherwise last 5 more years. The new lathe is expected to have a 5-year lite and depreciation charges ot $2,280 in Year 1; $3,648 The ar 2; $2.1 66 n Year 3; $1.368 n both Year 4 and Year 5: and $570 in Year 6 Tho m est ma es he re onues and o ponses e ciuding dopreciation and n erest for the new and he old lathes to bo as shown n te follow ng table rate on ordinary income. . Calculate the operating cashindows assocated with each lathe. (Note: Be sure to consider tne dopreciation n yoar6) b, Calculate the operating cash infows resulting from the proposed lathe replacement. c. Depict on a time line the incremental operating cash inflows calculated in part b. is sub ect to a 40% tax 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.) New Lathe Old Lathe Expenses (excluding depreciation and interest) $29,300 29,300 29,300 29,300 29,300 Expenses (excluding depreciation and interest) $23,000 23,000 23,000 23,000 23,000 Year Revenue $40,600 41,600 42,600 43,600 44,600 Revenue $34,300 34,300 34,300 34,300 34,300 2 4 5 Print Done
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