Incremental operating cash inflows$-$Expense reduction Miller Corporation is considering roplacing a machino. The roplacoment will roduco oporating oxponses $($that is$,$ increase earnings before deprociation, interost, and taxos$)$ by $$15,000$ per year for each of the $5$ years the new machine is expected to last. Although the old machino has zero book value, it can bo used for $5$ more years. The depreciable value of the new machine is $$40,000.$ The firm will deprociate the machine under MACRS using a $5-$year recovery $$ and is subject to a $40\%$ tax rate. Estimate the incremental operating cash inflows generated by the replacement. $($Note: Be sure to consider the depreciation in year $6.)$

Find the incremental operating cash inflows generated by the replacement for year $1$ below: $($Round to the nearest dollar.$)$

$\backslash$table$[[$Year$,1],[$Incremental expense savings,$ $15,000],[$Incremental profits before depreciation and taxes,$$],[$Less: Depreciation,$$],[$Net profits before taxes,$$],[$Taxes$,$$$],[$Not profits after taxes,$$],[$Operating cash flows,$$]]$

Data table

$\backslash$table$[[($Click on the icon here bin order to copy the contents of the data table below into a spreadsheet.$)],[$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$],[1,33\%,20\%,14\%,10\%],[2,45\%,32\%,25\%,18\%],[3,15\%,19\%,18\%,14\%],[4,7\%,12\%,12\%,12\%],[5,,12\%,9\%,9\%],[6,,5\%,9\%,8\%],[7,,,9\%,7\%],[8,,,4\%,6\%],[9,,,,6\%],[10,,,,6\%],[11,,,,4\%],[$Totals$,100\%,100\%,100\%,100\%],[*$These percenlages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculale 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.$]]$

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