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Relevant cash flows- No temninal value Contral Laundry and Cleanars is considering roplacing an existing piece of machinery with a more sophisticated machine The od

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Relevant cash flows- No temninal value Contral Laundry and Cleanars is considering roplacing an existing piece of machinery with a more sophisticated machine The od machine was parchased 3 yeirs ago at a cost of $54.700, and this arrount was being deprecialed under MaCRS using a 5 -year recovery period. The machine. has 5 yess of usable ise remaining. The new machme that is being considared costs 575,300 and tecuires $4,200 in instalation costs. The new machine would be depreciated undor MACRS using a 5 -your recovery petiod. The firm can cumenty seli the old machine for $54.600 without incurring any rernoval or clearnup costa. The firm is subyect toa lax rate of 40. The revenwes and expenses (excluding depreciation and interest) associased with the new and tho oid inachines for the next 5 . years are gwen in the tabie (Table contans the applicable Mhcr's dopreciation percentages.) Note. The new machine wil have no terminai value at the ond of 5 years. a. Colcuate the insal investroent associated weh feplacement of the oid machine by the new one b. Delermine tho incremental operatng cash infows associatod aith the proposed replacement. (Note, Be sure to oonsider the depreciatian in yorar 6.) c. Depict on a time line the reiovant cash fows found in parts (a) and (b) assocated with the proposod replacoment docision. firm is subject to a tax rate of 40%. The revenues and expenses (exclualing years are given in the table . (Table contains the applicable MACRS depreciation percentages.) Note years. a. Calculate the initial investment associated with replacement of the old machine by the new one. b. Determine the incremental operating cash inflows associated with the proposed replacement. (No c. Depict on a time line the relevant cash flows found in parts (a) and (b) associated with the propose Calculate the cash flows with the old machine below: (Round to the nearest dollar.)

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