= Homework: Homework Set 4 Question 13, P11-11 (si... Part 1 of 13 HW Score: 19.17%, 9.58 of 50 points Points: 0 of 2 Save Incremental operating cash inflows Afirm is considering renewing he equipment to meet incresced demand for a product. The cost of equipment modifications is $1.56 million plus $110,000 n instalation coate. The firm will depreciate the equipment modifications under MACRS. using a 5 year recovery period (see table ). Additional sales revenue from the renewal should amount to $1.24 million per year and additional Operating expenses and other costs (excluding depreciation and interest) wil around to 44% of the additional sales. The firm is subject to a tax rate of 40%. (Note: Answer the folosing questions for each of the next 6 years.) a. Whal incremental earnings before depreciation, interest and taxes wil result from the renewal? b. What incremental net operating profits after taxes will result from the renewal? c. What incremental operating cash Intlows wil result from the ranewal? . a. The incremental profits batones denraciation and tax an $ . {Round to the nearest dollar) { Data table D (Click on the inon located on the top-right corner of the data table below in order to copy its contents 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% 204% 14% 10% 2 45% 32' 25% 18% 15% 184 18% 14% 4 7% 12% 1254 12% 5 12% 9% 9% 6 5% 9% 7 9% 7% 8 4% 6% 9 54 10 6% 11 Totals 100% 100% 100% 100% "These paroantages have been runded in the nearest whole pareant to simplity calculations whila retaining realism. To calculate the actual depreciation for lex purposesbe sure to apply the actual urrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year convention Print Done