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please rewrite the answer in the same style but with straight line method not MACORS i want you to solve the depreciation part with straight
please rewrite the answer in the same style but with straight line method not MACORS i want you to solve the depreciation part with straight line method instead of MACORS - Example of Asset Replacement To go to a somewhat more complicated example, we suppose that we are considering the purchase of a new automotive-glass mold to replace an old mold and that we need to obtain cash-flow information to evaluate the attractiveness of this project. The purchase price of the new mold is $18,500, and it will require an additional $1,500 to install, bringing the total cost to $20,000. The old mold, which has a remaining useful life of four years, can be sold for its depreciated (tax) book value of $2,000. The old mold would have no salvage value if held to the end of its useful life. Notice that, as salvage value equals tax book value, taxes due to the sale of the old asset are zero. The initial cash outflow for the investment project, therefore, is $18nnn ae fnllnws. The new machine should cut labor and maintenance costs and produce other cash savings totaling $7,100 a year before taxes for each of the next four years, after which it will probably not provide any savings nor have a salvage value. These savings represent the net operating revenue savings to the firm if it replaces the old mold with the new one. Remember, we are concerned with the differences in the cash flows resulting from continuing to use the old mold versus replacing it with a new one. Suppose that the new mold we are considering falls into the three-year property category for MACRS depreciation. Moreover, assume the following in regards to the old mold: 1. The original depreciable basis was $9,000. 2. The mold fell into the three-year property class. 3. The remaining depreciable life is two years. Because we are interested in the incremental impact of the project, we must subtract depreciation charges on the old mold from depreciation charges on the new one to obtain the incre- Terminal-year incremental net cash flow Terminal-yearincrementalnetcashflow=Incrementalcashflowfortheterminalyearbeforeprojectwindupconsiderations+-=Finalsalvagevalueof"new"assetTaxes(taxsavings)duetosaleordisposalof"new"assetTerminal-yearincrementalnetcashflow$4,8530 'Assumes that tax loss shields other income of the firm. The expected incremental net cash flows from the replacement project are: For an initial cash outflow of $18,000, then, we are able to replace an old dlass mold with a
please rewrite the answer in the same style but with straight line method not MACORS
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