Operating cash inflows Strong Tool Company has been considering purchasing a new lathe to replace a fully depreciated lathe that would otherwise last 5 more years. The new lathe is expected to have a 5-year life and depreciation charges of $2,200 in Year 1; $3,520 in Year 2; $2,090 in Year 3; $1,320 in both Year 4 and Year 5; and $550 in Year 6. The firm estimates the revenues and expenses (excluding depreciation and interest) for the new and the old lathes to be as shown in the following table

New Lathe			Old Lathe
Year	Revenue	Expenses (excluding depreciation and interest)		Revenue	Expenses (excluding depreciation and interest)
1	$38,900	$28,100		$35,100	$26,100
2	39,900	28,100		35,100	26,100
3	40,900	28,100		35,100	26,100
4	41,900	28,100		35,100	26,100
5	42,900	28,100		35,100	26,100

. The firm is subject to a 40% tax rate on ordinary income.

a. Calculate the operating cash inflows associated with each lathe. (Note: Be sure to consider the depreciation in year6.)

b. Calculate the operating cash inflows resulting from the proposed lathe replacement.

c. Depict on a time line the incremental operating cash inflows calculated in part b.

Calculate the operating cash inflows associated with the new lathe below:(Round to the nearest dollar.)

Year	1
Revenue	$
Expenses (excluding depreciation and interest)	$
Profit before depreciation and taxes	$
Depreciation	$
Net profit before taxes	$
Taxes	$
Net profit after taxes	$
Operating cash flows	$