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 $2,020 in Year 1; $3,232 in Year 2, $1,919 in Year 3, $1,212 in both Year 4 and Year 5 and $505 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 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 year 6.) 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 Year Revenue Expenses (excluding depreciation and interest) Profit before depreciation and taxes Depreciation Net profit before taxes Taxes Net profit after taxes Operating cash flows S New Lathe Old Lathe Expenses (excluding depreciation and interest) $28,400 28,400 28,400 28,400 28,400 Expenses (excluding depreciation and interest) $26,200 26,200 26,200 26,200 26,200 Year Revenue $40,200 41,200 42,200 43,200 44,200 Revenue $33,600 33,600 33,600 33,600 33,600