Question: A $ 54,000 machine with a 5 -year class life was purchased 2 years ago. The machine will now be sold for $ 50,000 and

A $ 54,000 machine with a 5 -year class life was purchased 2 years ago. The machine will now be sold for $ 50,000 and replaced with a new machine costing $97,000, with a 10 -year class life. The new machine will not increase sales, but will decrease operating costs by $13,000 per year. Simplified straight line depreciation is employed for both machines, and the marginal corporate tax rate is 34%. What is the incremental annual cash flow associated with the project?

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