Cuda Marine Engines, Inc. must develop the relevant cash flows for a replacement capital investment proposal. The proposed asset costs $50,000 and has installation costs of $3,000. The asset will be depreciated using a five-year recovery schedule. The existing equipment, which originally cost $25,000 and will be sold for $10,000, has been depreciated using an MACRS five-year recovery schedule and three years of depreciation has already been taken. The new equipment is expected to result in incremental before-taxearnings before depreciation, interest and taxes (EBIDT)of $15,000 per year. The firm has a 40 percent tax rate.

9) The annual incremental after-tax cash flow from operations for year 1(for the new equipment)is ________.

A) $13,950

B.) The homework verifies that it is not 16,600

C) $13,240

D) $30,000