Relevant cash flowsNo terminal value Central Laundry and Cleaners is considering replacing an existing piece of machinery with a more sophisticated machine. The old machine was purchased 3 years ago at a cost of $53,200, and this amount was being depreciated under MACRS using a 5-year recovery period. The machine has 5 years of usable life remaining. The new machine that is being considered costs 576,800 and requires $3,800 in installation costs. The new machine would be depreciated under MACRS using a 5-year recovery period. The firm can currently sell the old machine for $55,600 without incurring any removal or cleanup costs. The firm is subject to a tax rate of 40%. The revenues and expenses (excluding depreciation and interest) associated with the new and the old machines for the next 5 years are given in the table 5 (Table : contains the applicable MACRS depreciation percentages.) Note: The new machine will have no terminal value at the end of 5 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. (Note: Be sure to consider the depreciation in year 6.) c. Depict on a time line the relevant cash flows found in parts (a) and (b) associated with the proposed replacement decision. a. Calculate the initial investment associated with replacement of the old machine by the new one. Calculate the initial investment below: (Round to the nearest dollar.) Cost of new asset Data table Installation costs Total cost of new asset $ (Click on the icon here e in order to copy the contents of the data table below into a spreadsheet.) Proceeds from sale of old asset $ Tax on sale of old asset Total proceeds, sale of old asset Initial investment $ Year 1 2 3 Revenue $750,400 750,400 750,400 750.400 750,400 New machine Expenses (excluding depreciation and interest) $721,000 721,000 721,000 721.000 721,000 Revenue $674,600 676,600 680,600 678,600 674,600 Old machine Expenses (excluding depreciation and interest) $660,200 660,200 660,200 660.200 660,200 4 5