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The Select Comfort Company purchased a mattress-stuffing machine 5 vears ago for $70,000. When purchased, it had an estimated salvage value of $5,000 at the

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The Select Comfort Company purchased a mattress-stuffing machine 5 vears ago for $70,000. When purchased, it had an estimated salvage value of $5,000 at the end of seven years. Last year, the mattress machine was overhauled at a cost of $3,000. The old machine can be sold today for $20,000 and its book value today is $25,802. A new machine can be purchased for $69,300. It has a 2 -year life and is expected to reduce operating expenses by $50,000 per vear. After 2 years, the new machine can be sold for $20,000. Both machines are in the 10 -year property class with depreciation rates of 10%,18%,14.4%,11.52%,9.22%,7.37%, and 655% in the first seven years. The company's cost of copital is 9% and the tax rate is 35%. Answer the followine questions. What are the initial cash flows? (Answer in dollars and round to the nearest dollar.) What are the operating cash flows at the end of the first year? (Answer in dollars and round to the nearest dollar.) What are the terminal vear cash flows? (Answer in dollars and round to the nearest dollar) What is the NPV of the replacement cash flows? (Answer in dollars and round to the nearest dollar) The Select Comfort Company purchased a mattress-stuffing machine 5 vears ago for $70,000. When purchased, it had an estimated salvage value of $5,000 at the end of seven years. Last year, the mattress machine was overhauled at a cost of $3,000. The old machine can be sold today for $20,000 and its book value today is $25,802. A new machine can be purchased for $69,300. It has a 2 -year life and is expected to reduce operating expenses by $50,000 per vear. After 2 years, the new machine can be sold for $20,000. Both machines are in the 10 -year property class with depreciation rates of 10%,18%,14.4%,11.52%,9.22%,7.37%, and 655% in the first seven years. The company's cost of copital is 9% and the tax rate is 35%. Answer the followine questions. What are the initial cash flows? (Answer in dollars and round to the nearest dollar.) What are the operating cash flows at the end of the first year? (Answer in dollars and round to the nearest dollar.) What are the terminal vear cash flows? (Answer in dollars and round to the nearest dollar) What is the NPV of the replacement cash flows? (Answer in dollars and round to the nearest dollar)

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