Score: 0 of 10 pts 4 of 5 (1 complete) HW Score: 12.82%, 5 of 39 pt P11-16 (similar to) Question Help Relevant cash flows-No terminal value Central Laundry and Cleanets is considering replacing an existing piece of machinery with a more sophisticated machine The old machine was purchased 3 years ago at a cost of $45,400 and this amount was being depreciated under MACRS using a 5 year recovery penod The machine has 5 yours of usable to remaining the new machine that is being considered costs $76,700 and requires $4,000 in installation costs. The new machine would be depreciated under MACRS using a 5 year recovery period. The firm can currently sell the old machine for $55,800 without incurring any removal or cleanup costs. The firm is subject to a tax rate of 40%. The revenues and expenses (excluding depreciation and interest) associated with the new and the old machines for the next 5 years are given in the table (Tablo contains the applicable MACRS dopreciation porcentages.) Noto The new machine will have no terminal value at the end of 5 years a. Calculate the initial investment associated with replacement of the old machine by the new one b. Determine the incremental operating cash wows associated with the proposed replacement (Note Be sure to consider the depreciation in your 6) c. Depict on a time in the relevant cash flows found in parts (a) and (b) associated with the proposed replacement decision . Calculate the initial wivestment associated with replacement of the old machine by the new one. Calculate the initial investment below (Round to the nearest doar Cost of new asset Instalaton costs Total cost of now asset Proceeds from sale of old asset Tax on sale of old asset 5 Total proceeds sale of old asset 5 Initial investment Entet any number in the edit fields and then click Check Answer 13 ans remaining Olear All Check Answer - Data Table 1 (Click on the icon here in order to copy the contents of the data table below into a spreadsheet) New machine Old machine Expenses Expenses (excluding depreciation and (excluding depreciation and Year Revenue interest) Revenue interest) 1 $750,800 $719,600 $674,000 5660,400 2 750.800 719,600 676,000 660,400 3 750.800 719,600 680,000 660,400 4 750.800 719,600 678,000 660,400 5 750.800 719,600 674,000 660,400 st Print Done (Click on the icon here in order to copy the contents of the data table below into a spreadsheet) 10 years Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year Recovery year 3 years 5 years 7 years 1 33% 20% 14% 10% 2 45% 32% 25% 18% 3 15% 19% 18% 14% 4 7% 12% 12% 12% 5 12% 9% 9% 6 5% 9% 8% 7 9% 7% 4% 6% 9 6% 10 6% 11 4% Totals 100% 100% 100% 100% *These percentages have been rounded to the nearest whole percent to simplity calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year convention Print Done