Question: A $ 9 0 , 0 0 0 machine with a 9 - year class life was purchased 3 years ago. The machine will now

A $90,000 machine with a 9-year class life was purchased 3 years ago. The machine will now be repalced with a new machine costing $92,000, with a 5-year class life. The new machine will not increase sales, but will decrease operating costs by $15,000 per year. Simplified straight line depreciation is employed for both machines, and the marginal coporate tax is 21 percent. What is the incremental annual cash flow associated with the project in year 1?

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