The Everkt equipment company purchased a machine 5 years ago at a cost of $600,000. The machine had an expected life of 10 years at the time of purchase, and it is being depreciated straight-line down to a book value of zero. If the machine is not replaced, it can be sold for $20,000 at the end of its useful life.

A new machine can be purchased for $800,000, including installation cost. During its 5 year life, it will reduce cash operating expenses by $30,000 each year. Sales are not expected to change. The machine will be depreciated straight line to a zero book value.

The old machine can be sold today for $350,000. The firm's tax rate is 30%, and the appropriate cost of capital is 15%. The company is now considering whether it should replace the existing machine.

The following questions all apply to the consideration of this replacement decision.

(All answers round to the nearest dollar.Be specific with the sign: cash outflow should have a negative sign.)

1. If the old machine is sold today, what is the net cash flow from its sale?
2. What is the annual amount ofincrementaldepreciation tax shield if the firm decides to purchase the new machine?
3. What is the amount of the initial cash flow at year 0?
4. What is the incremental net cash flows that will occur at the end of year 5?