Relevant cash flows-No terminal value Central Laundry and Cleaners is considering replacing an existing piece of machinery with a more sophisticated machine. The old machine was purchased3 years ago at a cost of $54,400 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 cost 75,300 and requires 3,900 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 55,700 without incurring any removal or cleanup cost. 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 given in the table Table contains the applicable MACRS deprecation percentages.) Note: The new machine will have no terminal value at the end of 5 years

Relevant cash flows-No terminal value Central Laundry and Cleaners is considering replacing an exting piece of machinery with a more sophisticated machine. The old machine was puedes conto $54400, and this amount was being depreciated under MACRS using a 5-year recovery poriod. The machine as yours of usable to remaining. The machine that is being considered costs 375 and 1.600 notion costs. The new machine would be deprecated under MACRS using a 5 ye recovery period. The firm concurrently sell the old machine for $55,700 without incurring you ordenaco Thermo tax rate of 40%. The revenues and expenses excluding depreciation and sociated with the new and the old machines for years are given in the table Table contains the applicable MACRS depreciation percentages) No. The new machine wiltuve no terminal value at the end of years a. Calculate the investment associated with replacement of the old machine by the new one. b. Determine the crumental operating cast inflows associated with the proposed replacement. (Note Be sure to consider the dependienon in your 6. Depict on a timeline the relevant cash flows found in parts. (a) and (b) associated with the proposed replacement decision a Calculate the tal investment associated with replacement of the old machine by the new one Calculate the initial investment below: Round to the nearest Gol Cost of new asset instation costs Tot of new Proceeds from sale of old asset Tax on sale of oldest Toti proces, sale of old asset Iniment 5 score wer 40f 5-2 complete HW Score: 23.08% 9 of 39 pts Data Table - X antonio 0 Data e 209 25 TON ock on the loon here in order to copy the contents of the datatable below Wo a spreadsheet Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year Recovery year 3 years 5 years 7 years 33% 10 years 14 32 10% 18 15% 14 2N 12% 129 12% 12 3 9 ON 7 ON 8 0 10 0 11 Total 100% 100 100% 100 "Those percentages have been founded to the nearest Whole percent to simply cloutions while retaining room. To calculate the actual depreciation for tax purposes, escolythe actual unrounded percentages or directly apply double declining balance (2009) depreciation using the low convention ick on the icon in order to copy the contents of the database New machine Old machine Expenses excluding depreciation and Expenses Year Revenue escluding depreciate Interest Revenue Interesh 1 3700000 172000 164200 10000 2 750.800 720 300 200 $1,000 3 750,000 720.000 000,200 4 750,000 720.300 7.300 710.000 720.300 674.200 1.000 Print Done Pri Done y number in the edities and then click Check Answer - X is S. - TH le * Data Table in ed me (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) ind itial Year 1 2 3 4 5 New machine Expenses (excluding depreciation and interest) $720,300 720,300 720,300 720,300 720,300 Revenue $750,600 750,600 750,600 750,600 750,600 wal Old machine Expenses (excluding depreciation and interest) $661,000 661,000 661,000 661,000 661,000 Revenue $674,200 676,200 680,200 678,200 674,200 co of ron e of Print Done ceel stment sind 5. riad Thaim.can cu ould be donteciated under MA ens tain Data Table - vea ciate ca sh fil (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) ciate (Rd Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year Recovery year 3 years 5 years 7 years 10 years 1 33% 20% 14% 10% 2 45% 32% 25% 18% 3 15% 19% 18% 14% 4 7% 12% 12% 12% 5 12% 9% 9% 6 5% 9% 8% 7 9% 7% 8 4% 6% 9 6% 10 6% 11 4% Totals 100% 100% 100% 100% *These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year convention COOWN re 1 weny 0,60 0,60 0,60 0,60 -0,60 Print Done Q BI | Ai