W P11-16 (similar to) Question Help Relevant cash flows No terminal value Central Laundry and Cleaners 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 $54,800, and this amount was being depreciated under MACRS using a 5-year recovery period. The machine has 5 years of usable life remaining The new machine that is being considered costs $76,000 and requires $3,900 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 $54,700 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 II contains the applicable MACRS depreciation percentages) Note: 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 inflows associated with the proposed replacement. (Note: Be sure to consider the depreciation in year 6) c. Depict on a time line the relevant cash flows found in parts (a) and (b) associated with the proposed replacement decision a. Calculate the initial investment associated with replacement of the old machine by the new one. Calculate the initial investment below (Round to the nearest dollar.) Cost of now asset Installation costs Total cost of new asset Proceeds from sale of old asset Tax on sale of old asset Total proceeds, sale of old asset Initial investment Enter any number in the edit fields and then click Check Answer. W P11-16 (similar to) Question Help Relevant cash flows No terminal value Central Laundry and Cleaners 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 $54,800, and this amount was being depreciated under MACRS using a 5-year recovery period. The machine has 5 years of usable life remaining. The new machine that is being considered costs $76,000 and requires $3,900 in installation costs. The new machine would be depreciated under MACRS using a 0 Data Table - X (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Year Revenue $750,100 750 100 750 100 750 100 750,100 New machine Expenses (excluding depreciation and interest) $720.700 720.700 720,700 720.700 720,700 Revenue 5674.400 676,400 680.400 678,400 674.400 Old machine Expenses (excluding depreciation and interest $660 000 660,000 660,000 660,000 660,000 Print Done Initial investment Enter any number in the edit fields and then click Check Answer. 13 remaining Clear All Check Answer 1219 PE 4/19/2020 % P11-16 (similar to) Question Help Data Table - X with (Click on the icon here in order to copy the contents of the data table below into a spreadsheet) Releva a more depreci being 5-year is subjel machine given in termina a. Calcu b. Deter depreci c. Depid a. Calcu 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 10 years 33% 20% 14% 10% 45% 32% 25% 18% 15% 19% 18% 14% 12% 12% 129 12% 9% 8% 9% 7% 4% 8% 6% 6% 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 COWN Calcula 5% 9% 9% mr Init Enter ar Print Done 13 remaining Check Answer no 12:19 PM 419/20207