10. Your firm is replacing a manually-operated machine with a fully automated machine. The old machine...

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10. Your firm is replacing a manually-operated machine with afully automated machine. The old machine was purchased 5 years ago,had an original depreciable value of $140,000, and is depreciableusing simplified straight-line for 10 years. The old machine hasmaintenance and defects costs totaling $9,000 per year. The currentsalvage value of the old machine is $12,000. The new machine costs$80,000 with shipping costs of $2,000. The new machine would bedepreciated over 5 years using simplified straight line, and wouldhave no salvage value after the fifth year. The new machine wouldhave maintenance and defects costs totaling $4,000 per year. Thetax rate is 21%. What is the annual cash flow for years 1 through 5(not including the terminal cash flow) if the project isundertaken? a) $5,000 d) $2,054 b) $2,600 e) $3,950 c) $4,454Answer is C but how do you get that?

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10. Your firm is replacing a manually-operated machine with afully automated machine. The old machine was purchased 5 years ago,had an original depreciable value of $140,000, and is depreciableusing simplified straight-line for 10 years. The old machine hasmaintenance and defects costs totaling $9,000 per year. The currentsalvage value of the old machine is $12,000. The new machine costs$80,000 with shipping costs of $2,000. The new machine would bedepreciated over 5 years using simplified straight line, and wouldhave no salvage value after the fifth year. The new machine wouldhave maintenance and defects costs totaling $4,000 per year. Thetax rate is 21%. What is the annual cash flow for years 1 through 5(not including the terminal cash flow) if the project isundertaken? a) $5,000 d) $2,054 b) $2,600 e) $3,950 c) $4,454Answer is C but how do you get that?