Operating cash flows Richard and Linda Thomson operate a local lawn maintenance service for commercial and residential property. They have been using a John Deere riding mower for the past several years and believe that it is time to buy a ne would like to know the operating cash flows associated with the replacement of the old riding mower. The following data are available. 1. There are 5 years of remaining useful life on the old mower. 2. The old mower has a zero book value. 3. The new mower is expected to last 5 years. 4. The Thomsons will follow a 5-year MACRS 5 recovery period for the new mower. 5. Depreciable value of the new lawn mower is $1,800. 6. They are subject to a 40% tax rate. 7. The new mower is expected to be more fuel-efficient, maneuverable, and durable than the previous models and can result in reduced operating expenses of $498 per year. 8. The Thomsons will buy a maintenance contract that calls for annual payments of $113. Create an operating cash flow statement for the replacement of Richard and Linda's John Deere riding mower. Show the operating cash flow for the next 6 years. Calculate the incremental operating cash flow statement below: (Round to the nearest dollar.) Data Table Richard and Linda Thomson Incremental Operating Cash Flows Replacement of John Deere Riding Mower (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a Year spreadsheet.). Savings from new and improved mower $ Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Less: Annual maintenance cost Percentage by recovery year* Less: Depreciation Recovery year 3 years 5 years 7 years 10 years 33% 20% 14% 10% Savings (loss) before taxes 45% 32% 25% 18% Taxes (40%) 15% 19% 18% 14% Savings (loss) after taxes 12% 12% 12% Incremental operating cash flow 9% 8% 12% O co VoWN- 5% Enter any number in the edit fields and then click Check Answer. 4% 5 parts 6% 6% 6% 4% 100% remaining Totals 100 100 100