P11-13 (similar to Question Help 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 $2,220 in Year 1; $3,552 in Year 2; $2,109 in Year 3; $1,332 in both Year 4 and Year 5; and $555 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 B. 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 1 New Lathe Expenses (excluding depreciation and interest) $31,400 31,400 31,400 31,400 31,400 Revenue $40,000 41,000 42,000 43,000 44,000 2 Old Lathe Expenses (excluding depreciation and interest) $24,100 24,100 24,100 24,100 24,100 Revenue $36,700 36,700 36,700 36,700 36,700 3 4 5 a. 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