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Relevant cash flows No terminal value Central Laundry and Cleaners is considering replacing ang pince of machinery with a more chied machine The old machine was purchmed 3 years ago at a cost of $52,400, and this amount was being depreciated under MACRS using your recovery period. The machine has 6 years of usable life remaining. The new machine that is beng considered cont $76,400 and requime $3.700 in instalation coul. The new machine would be depreciated under MACRS using a year recovery period. The firm concurrenty sell the old machine for $56.600 without incuring any removal or cheap costs. The firm is subject to a tax rate of 40%. The revenues and expenses (excluding depreciation and interest) asociated with the new and the old machines for the next 5 years are given in the table (Table contains the applicable MACRS depreciation percentages) Note: The new machine will have no terminale 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 infows associated with the proposed replacement. (Note: Be sure to consider the depreciation in year 6) c. Depict on a timeline the relevant cash flows found in parts (a) and (b) associated with the proposed replacement decision MAN Ton 1 2 con 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) end of war EN 5 52400 Cost of new as Instaliation costs Total cost of new asset Proceeds from sale of old asset ciation 62400 Tax on sale of oldest $ Total proceede, sale of old asset S Initial rivestment UU ULILULUU VAN Tuy old my chine d be PUHUL Opriscated MANA chine X cleanup bs for the - The Data table 5 yed end of 5 nint TS. alcula eter epict machine (Click on the icon located on the top-right comer of the data tablo below in order to copy its contents into a spreadsheet) Now machine Old machine Expenses Expenses (excluding depreciation (excluding depreciation Year Revenue and interest) Revenue and Interest) 1 $750.600 $720,300 $674,300 $659,500 2 750,600 720,300 676,300 659,500 3 750,600 720,300 680,300 659,500 4 750,600 720,300 678,300 659,500 5 750,600 720,300 674,300 659,500 alcul 3 culato cation Cost heat end Chine Instal Tot in Done Print ciation Proce Taxo Total proceeds, sale of old asset

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