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Top - Ten Inc. is considering replacing its existing machine that is used to produce musical CDs . This existing machine was purchase 2 years

Top-Ten Inc. is considering replacing its existing machine that is used to produce musical CDs. This existing machine was purchase 2 years ago at a base price of $80,000. Installation costs at the time for the machine were $5,000. The existing machine is considered a 3-year class for MACRS. The existing machine can be sold today for $40,000 and for $10,000 in 3 years. The new machine has a purchase price of $70,000 and is also considered a 3-year class for MACRS. Installation costs for the new machine are $4,000. The estimated salvage value of the new machine in 3 years is $30,000. This new machine is more efficient than the existing one and thus savings before taxes using the new machine are $6,000 a year. The company's marginal tax rate is 30% and the cost of capital is 12%. For the new machine project, What is the project incremental recurring Cash Flows (RCF) in year 2?(RCF is also known as operating cash flow or net cash flow).

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