part C
Operating cash flows 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 $2,400 in Year 1: $3,840 in Year 2; 52,280 in Year 3, S1,440 in both Year 4 and Year 5; and 5600 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 flows associated with each lathe. (Note: Be sure to consider the depreciation in year 6.) b. Calculate the operating cash flows resulting from the proposed lathe replacement. c. Depict on a timeline the incremental operating cash flows calculated in part b. a. Calculate the operating cash flows associated with the new lathe below. (Round to the nearest dollar) 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 Enter any number in the edit fields and then continue to the next question Operating cash flows 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 $2,400 in Year 1, $3,840 in Year 2, 52,280 in Year 3, S1,440 in both Year 4 and Year 5, and $600 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 flows associated with each lathe. (Note: Be sure to consider the depreciation in year 6.) b. Calculate the operating cash flows resulting from the proposed lathe replacement c. Depict on a time line the incremental operating cash flows 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 b. Calculate the incremental (relevant) operating cash flows resulting from the proposed lathe replacement Operating cash flows Strong Tool Company has been considering purchasing a new lathe to replace a fully depreciated lathe that would otherwise last years. The new lathe is expected to have a 5-year life and depreciation charges of $2,400 in Year 1: $3,840 in Year 2, $2,280 in Year 3: $1.440 in both Ye 5; and 5600 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 following table. The firm is subject to a 40% tax rate on ordinary income. a. Calculate the operating cash flows associated with each lathe. (Note: Be sure to consider the depreciation in year 6.) b. Calculate the operating cash flows resulting from the proposed lathe replacement, c. Depict on a time line the incremental operating cash flows calculated in part b. Operating cash flows b. Calculate the incremental (relevant) operating cash flows resulting from the proposed lathe replacement Calculate the incremental (relevant) operating cash inflows resulting from the proposed lathe replacement below: (Round to the nearest dollar.) Year New Lathe Old Lathe Incremental Cash Flows (Round to the nearest dollar) Year Enter any number in the edit fields and then continue to the next question Operating cash flows Strong Tool Company has been considering purchasing a new lathe to replace a fully depreciated lan years. The new lathe is expected to have a 5-year life and depreciation charges of $2,400 in Year 1: $3,840 in Year 2, $2,280 5; and $600 in Year 6. The firm estimates the revenues and expenses (excluding depreciation and interest) for the new and th following table . The firm is subject to a 40% tax rate on ordinary income. a. Calculate the operating cash flows associated with each lathe. (Note: Be sure to consider the depreciation in year 6.) b. Calculate the operating cash flows resulting from the proposed lathe replacement. c. Depict on a time line the incremental operating cash flows calculated in part b. O A. Year 012345 $2,820 $3,996 $3,972 $4,236 $4,836 Cash flow O B. Year 3 Cash flow $8.640 $9.816 $9,792 510 056 $10,656 $240 O C. Year 2 3 $3.996 $3.972 $4236 $4.836 $240 Cash flow $2.820 OD. Year 01 2 3 Cash flow $2.820 53 996 5 3 972 $4 236 $4836 $240 Enter any number in the edit fields and then continue to the next question 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.) Year New Lathe Expenses (excluding depreciation and interest) $29,100 29,100 29,100 29.100 29,100 Revenue $41,900 42,900 43,900 44.900 45.900 AWN Old Lathe Expenses (excluding depreciation and interest) $25,500 25,500 25,500 25,500 25,500 Revenue $35,200 35,200 35,200 35,200 35,200 Print Done
