Rockyford Company must replace some machinery that has zero book value and a current market value of $1,800. One possibility is to Invest in new machinery costing $40,000. This new machinery would produce estimated annual pretax cash operating savings of $12.500. Assume the new machine will have a useful life of 4 years and depreciation of $10,000 each year for book and tax purposes. It will have no salvage value at the end of 4 years. The investment in this new machinery would require an additional $3,000 Investment of net working capital. (Assume that when the old machine was purchased, the incremental net working capital required at the time was $0.) If Rockyford accepts this investment proposal, the disposal of the old machinery and the investment in the new one will occur on December 31 of this year. The cash flows from the investment are expected to occur over a four-year period. Rockyford is subject to a 40% income tax rate for all ordinary income and capital gains and has a 10% weighted-average after-tax cost of capital. All operating and tax cash flows are assumed to occur at year-end. (For Parts 2 and 3, use the relevant table from Appendix C-Table 1 or Table 2) Required: 1. What is the after-tax cash flow arising from disposing of the old machinery? 2. What is the present value of the after-tax cash flows for the next 4 years attributable to the cash operating savings? 3. What is the present value of the tax-shield effect of depreciation expense for year 1? 4. Which one of the following is the proper treatment for the additional $3,000 of net working capital required in the current year? What is the after-tax cash flow arising from disposing of the old machinery? After-tax cash flow What is the present value of the after-tax cash flows for the next 4 years attributable to the cash operating savings? (Round your answer to nearest whole dollar amount.) Present value Required 1 Required 2 Required 3 Required 4 What is the present value of the tax-shield effect of depreciation expense for year 1? Present value Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 20% 25% 30% 1 0.962 0.952 0.943 0.935 0.926 0917 0.909 0.901 0.893 0.885 0.877 0.870 0.833 0.800 0.769 2 1.886. 1.859 1.833 1.808 1.783 1.759 1.736 1.713 1.690 1.668 1.647 1.626 1.528 1440 1.361 3 2.775 2.723 2.673 2.624 2.577 2.531 2487 2.444 2.402 2.361 2.322 2.283 2.106 1952 1.816 4 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3:102 3.037 2.974 2.914 2.855 2.589 2.362 2.166 5 4.452 4.329 4212 4.100 3.993 3.890 3.791 3.696 3.605 3517 3.433 3352 2.991 2.689 2.436 6 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4.231 4.111 3.998 3.889 3.784 3.326 2.951 2.643 7 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.712 4.564 4423 4.288 4.160 3.605 3.161 2.802 8 6.733 6.463 6.210 5.971 5.747 5.535 5.335 5.146 4.968 4.799 4.639 4487 3.837 3.329 2.925 9 7435 7.108 6.802 6.515 6.247 5.995 5.759 5.537 5.328 5.132 4.946 4.772 4.031 3.463 3019 10 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.889 5.650 5426 5.216 5.019 4.192 3.571 3.092 11 8.760 8.306 7.887 7.499 7.139 6.805 6.495 6.207 5.938 5.687 5.453 5.234 4.327 3.6561 3.147 12 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.492 6.194 5.918 5.660 5421 4.439 3.725 3.190 13 9.986 9.394 8.853 8.358 7.904 7487 7.103 6.750 6424 6.122 5.842 5.583 4.533 3.780 3.223 14 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.982 6.628 6.302 6.002 5.724 4.611 3.824 3.249 15 11.118 10.380 9.712 9.108 8.559 8.061 7.606 7.191 6.811 6.462 6.142 5.847 4.675 3.859 3.268 16 11.652 10.838 10.106 9447 8.851 8.313 7.824 7379 6.974 6.604 6.265 5.954 4.730 3.887 3.283 17 12.166 11.274 10.477 9.763 9.122 8.544 8.022 7.549 7.120 6.729 6.373 6.047 4.775 3.910 3.295 18 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7,702 7.250 6.840 6.467 6.128 4.812 3.928 3.304 19 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.839 7.366 6.938 6.550 6.198 4.843 3.942 3.311 20 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.963 7469 7.025 6.623 6.259 4.870 3.954 3.316 22 14.451 13.163 12.042 11.061 10.201 9.442 8.772 8.176 7.645 7.170 6.743 6.359 4.909 3.970 3.323 24 15.247 13.799 12.550 11.469 10.529 9.707 8.985 8.348 7.784 7.283 6.835 6434 4.937 3.981 3.327 25 15.622 14.094 12.783 11.654 10.675 9.823 9.077 8.422 7.843 7330 6.873 6.4641 4.948 3.985 3.329 30 17.292 15.372 13.765 12.409 11.258 10.274 9427 8.694 8.055 7.496 7.003 6.566 4.979 3.995 3.332 35 18.665 16.3741 14.498 12.948 11.655 10.567 9.644 8.855 8.176 7.586 7.070 6.617 4.992 3.998 3.333 40 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.951 8.244 7.634 7.105 6.642 4.997 3.999 3.333 muity factor a 3.791 (mm)