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Wilbur Corporation is considering replacing a machine. The replacement will cut operating expenses by $24,000 per year for each of the five years the new
Wilbur Corporation is considering replacing a machine. The replacement will cut operating expenses by $24,000 per year for each of the five years the new machine is expected to last. Although the old machine has a zero book value, it has a remaining useful life of five years. The depreciable value of the new machine is $48,000. Wilbur will depreciate the machine under MACRS using a 5-year recovery period and is subject to a 30% tax rate on ordinary income. Estimate the incremental operating cash flows attributable to the replacement. Be sure to consider the depreciation in year 6. Round your answers to the nearest dollar. Year 1 2 3 4 5 6 Incremental Operating Cash Flow
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