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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 $20,000 in 3 years. The new machine has a purchase price of $80,000 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 $5,000 a year. The company's marginal tax rate is 20% 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).
MACRS Fixed Annual Expense Percentages by Recovery Class
Year 3-Year 5-Year 7-Year 10-Year 15-Year
133.33%20.00%14.29%10.00%5.00%
244.45%32.00%24.49%18.00%9.50%
314.81%19.20%17.49%14.40%8.55%
47.41%11.52%12.49%11.52%7.70%
511.52%8.93%9.22%6.93%
65.76%8.93%7.37%6.23%
78.93%6.55%5.90%
84.45%6.55%5.90%
96.56%5.91%
106.55%5.90%
113.28%5.91%
125.90%
135.91%
145.90%
155.91%
162.95%
For your answer, round to the nearest dollar, do not enter the $ sign, use commas to separate thousands, use a negative sign in front of first number is the cash flow is negative (do not use parenthesis to indicate negative cash flows). For example, if your answer is $3,005.87 then enter 3006; if your answer is -$1,200.25 then enter -1200
For this project, the incremental recurring cash flow in year 2 is:

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