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LUI CUNELI TUI ble WUIR You have completa so far. It does not Mom's Cookies, Inc., is considering the purchase of a new cookie oven. The original cost of the old oven was $31.000, it is now five years old, and it has a current market value of $13,000. The old oven is being depreciated over a 10-year life toward a zero estimated salvage value on a straight-line basis, resulting in a current book value of $15,500 and an annual depreciation expense of $3,100. The old oven can be used for six more years but has no market value after its depreciable life is over. Management is contemplating the purchase of a new oven whose cost is $26.000 and whose estimated salvage value is zero. Expected before tax cash savings from the new oven are $4100 a year over its full MACRS depreciable life. Depreciation is computed using MACRS Over a 5 year life, and the cost of capital is 10 percent. Assume a 35 percent tax rate. What will the cash flows for this project be? (Note that the $31,000 cost of the old oven is depreciated over ten years at $3,100 per year. The half-year convention is not used for the old oven. Negative amounts should be indicated by a minus sign. Do not round Intermediate calculations and round your answers to 2 decimal places.) Answer is complete but not entirely correct. FCF 4 2.125 00 O 4387.00 n 234375 52 4265 314 265 31 4 182 68 Prev 55 I Score

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