I just need help with question number 2, I figured the other 3 out but keep getting #2 wrong.

Rockyford Company must replace some machinery that has zero book value and a current market value of $3,400. One possibility is to invest in new machinery costing $56,000. This new machinery would produce estimated annual pretax cash operating savings of $22,400. Assume the new machine will have a useful life of 4 years and depreciation of $14,000 each year for book and tax purposes. It will have no salvage value at the end of 4 years. The investment in this new machinery would require an additional $4,600 investment of net working capital. (Assume that when the old machine was purchased, the incremental net working capital required at the time was $0.) If Rockyford accepts this investment proposal, the disposal of the old machinery and the investment in the new one will occur on December 31 of this year. The cash flows from the investment are expected to occur over a four-year period. Rockyford is subject to a 40% income tax rate for all ordinary income and capital gains and has a 10% weighted-average after-tax cost of capital. All operating and tax cash flows are assumed to occur at year-end. (For Parts 2 and 3, use the relevant table from Appendix C-Table 1 or Table 2.) Required: 1. Determine the after-tax cash flow arising from disposing of the old machinery. 2. Determine the present value of the after-tax cash flows for the next 4-years attributable to the cash operating savings. 3. Determine the present value of the tax shield effect of depreciation for year 1. 4. Which one of the following is the proper treatment for the additional $4,600 of net working capital required in the current year? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Determine the present value of the after-tax cash flows for the next 4-years attributable to the cash operating savings. (Round your answer to the nearest whole dollar amount.) Present value TABLE 2 Present Value of Annuity of $1 5 Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 20% 25% 30% 1 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.585 0.877 0.870 0.833 0.500 0.769 2 1.886 1.859 1.833 1.SOS 1.783 1.759 1.736 1.713 1.690 1.668 1.647 1.626 1.528 1.440 1.361 3 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.444 2.402 2.361 2.322 2.283 2.106 1.952 1.816 4 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.102 3.037 2.974 2.914 2.555 2.539 2.362 2.166 5 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.696 3.605 3.517 3.433 3.352 2.991 2.689 2.436 6 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4.231 4.111 3.999 3.589 3.784 3.326 2.951 2.643 7 6.002 5.786 5.582 5.389 5.206 5.033 4.86S 4.712 4.564 4.423 4.288 4.160 3.605 3.161 2.802 S 6.733 6.463 6.210 5.971 5.747 5.535 5.335 5.146 4.96S 4.799 4.639 4.487 3.837 3.329 2.925 9 7.435 7.105 6.S02 6.515 6.247 5.995 5.759 5.537 5.328 5.132 4.946 4.772 4.031 3.463 3.019 10 8.111 7.722 7.360 7.024 6.710 6.415 6.145 5.889 5.650 5.426 5.216 5.019 4.192 3.571 3.092 11 8.760 8.306 7.887 7.499 7.139 6.805 6.495 6.207 5.938 5.687 5.453 5.234 4.327 3.656 3.147 12 9.385 S.563 8.354 7.943 7.536 7.161 6.314 6.492 6.194 5.918 5.660 5.421 4.439 3.725 3.190 13 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.750 6.424 6.122 5.542 5.583 4.533 3.780 3.223 14 10.563 9.899 9.295 8.745 S.244 7.786 7.367 6.982 6.628 6.302 6.002 5.724 4.611 3.824 3.249 15 11.118 10.350 9.712 9.10S 8.559 8.061 7.606 7.191 6.511 6.462 6.142 5.847 4.675 3.859 3.268 11.652 10.838 10.106 9.447 S.S51 8.313 7.824 7.379 6.974 6.604 6.265 5.954 4.730 3.857 3.283 17 12.166 11.274 10.477 9.763 9.122 S.544 3.022 7.549 7.120 6.729 6.373 6.047 4.775 3.910 3.295 18 12.659 11.690 10.528 10.059 9.372 9.756 3.201 7.702 7.250 6.540 6.467 6.128 4.812 3.928 3.304 19 13.134 12.085 11.158 10.336 9.604 S.950 8.365 7.839 7.366 6.938 6.550 6.198 4.543 3.942 3.311 13.590 12.462 11.470 10.594 9.518 9.129 8.514 7.963 7.469 7025 6.623 6.259 4.870 3.954 3.316 22 14.451 13.163 12.042 11.061 10.201 9.442 8.772 8.176 7.645 7.170 6.743 6.359 4.909 3.970 3.323 24 15.247 13.799 12.550 11.469 10.529 9.707 8.955 8.348 7.784 7.283 6.835 6.434 4.937 3.981 3.327 25 15.622 14.094 12.783 11.654 10.675 9.823 9.077 S.422 7.843 7.330 6.873 6.464 4.948 3.985 3.329 30 17.292 15.372 13.765 12.409 11.255 10.274 9.427 8.694 5.055 7.496 7.003 6.566 4.979 3.995 3.332 35 18.665 16.374 14.498 12.948 11.655 10.567 9.644 8.555 8.176 7.586 7.070 6.617 4.992 3.998 3.333 40 19.793 17.159 15.046 13.332 11.925 10.757 9.779 5.951 8.244 7.634 7.105 6.642 4.997 3.999 3.333 16 20 Note: The present value (PV) annuity factor for N periods and a rate of 7 per period = [1 (1 + 7) = 7. For example, for N = 5 and r=0.10, the PV annuity factor = 3.791 (rounded) TABLE 1 Present Value of $1 6% 75 4 5 9 Periods 4% 5% S% 9% 10% 11% 12% 13% 14% 15% 20% 25% 30% 1 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.833 0.500 0.769 2 0.925 0.907 0.890 0.873 0.557 0.542 0.826 0.812 0.797 0.783 0.769 0.756 0.694 0.640 0.592 3 0.889 0.364 0.540 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.655 0.579 0.512 0.455 4 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.572 0.482 0.410 0.350 5 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.567 0.543 0.519 0.497 0.402 0.328 0.269 6 0.790 0.746 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.480 0.456 0.432 0.335 0.262 0.207 7 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.376 0.279 0.210 0.159 S 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.434 0.404 0.376 0.351 0.327 0.233 0.168 0.123 9 0.703 0.645 0.592 0.544 0.500 0.460 0.424 0.391 0.361 0.333 0.308 0.284 0.194 0.134 0.094 10 0.676 0.614 0.558 0.508 0.463 0.422 0.356 0.352 0.322 0.295 0.270 0.247 0.162 0.107 0.073 11 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0.237 0.215 0.135 0.036 0.056 12 0.625 0.557 0.497 0.444 0.397 0.356 0.319 0.286 0.257 0.231 0.208 0.187 0.112 0.069 0.043 13 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.25% 0.229 0.204 0.152 0.163 0.093 0.055 0.033 14 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.232 0.205 0.151 0.160 0.141 0.078 0.044 0.025 15 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.209 0.183 0.160 0.140 0.123 0.065 0.035 0.020 16 0.534 0.458 0.394 0.339 0.292 0.252 0218 0.18 0.163 0.141 0.123 0.107 0.054 0.028 0.015 17 0.513 0.436 0.371 0.317 0.270 0.231 0.198 0.170 0.146 0.125 0.108 0.093 0.045 0.023 0.012 18 0.494 0.416 0.350 0.296 0.250 0.212 0.10 0.153 0.130 0.111 0.095 0.081 0.035 0.018 0.009 19 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.138 0.116 0.098 0.083 0.070 0.031 0.014 0.007 20 0.456 0.377 0.312 0.25% 0.215 0.178 0.149 0.124 0.104 0.087 0.073 0.061 0.026 0.012 0.005 22 0.422 0.342 0.278 0.226 0.184 0.150 0.123 0.101 0.083 0.068 0.056 0.046 0.018 0.007 0.003 24 0.390 0.310 0.247 0.197 0.158 0.126 0.102 0.002 0.066 0.053 0.043 0.035 0.013 0.005 0.002 25 0.375 0.295 0.233 0.134 0.146 0.116 0.092 0.074 0.059 0.047 0.035 0.030 0.010 0.004 0.001 30 0.308 0.231 0.174 0.131 0.099 0.075 0.057 0.044 0.033 0.026 0.020 0.015 0.004 0.001 0.000 35 0.253 0.151 0.130 0.094 0.068 0.049 0.036 0.026 0.019 0.014 0.010 0.008 0.002 0.000 0.000 0.208 0.142 0.097 0.067 0.046 0.032 0.022 0.015 0.011 0.008 0.005 0.004 0.001 0.000 0.000 40 Note: The present value (PV) factor for N periods and rate 7 per period = 1 = (1 + 7. For example, the PV factor for 10%. 5 years = 1 = (1 + 0.1035 = 0.621 (rounded) Rockyford Company must replace some machinery that has zero book value and a current market value of $3,400. One possibility is to invest in new machinery costing $56,000. This new machinery would produce estimated annual pretax cash operating savings of $22,400. Assume the new machine will have a useful life of 4 years and depreciation of $14,000 each year for book and tax purposes. It will have no salvage value at the end of 4 years. The investment in this new machinery would require an additional $4,600 investment of net working capital. (Assume that when the old machine was purchased, the incremental net working capital required at the time was $0.) If Rockyford accepts this investment proposal, the disposal of the old machinery and the investment in the new one will occur on December 31 of this year. The cash flows from the investment are expected to occur over a four-year period. Rockyford is subject to a 40% income tax rate for all ordinary income and capital gains and has a 10% weighted-average after-tax cost of capital. All operating and tax cash flows are assumed to occur at year-end. (For Parts 2 and 3, use the relevant table from Appendix C-Table 1 or Table 2.) Required: 1. Determine the after-tax cash flow arising from disposing of the old machinery. 2. Determine the present value of the after-tax cash flows for the next 4-years attributable to the cash operating savings. 3. Determine the present value of the tax shield effect of depreciation for year 1. 4. Which one of the following is the proper treatment for the additional $4,600 of net working capital required in the current year? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Determine the present value of the after-tax cash flows for the next 4-years attributable to the cash operating savings. (Round your answer to the nearest whole dollar amount.) Present value TABLE 2 Present Value of Annuity of $1 5 Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 20% 25% 30% 1 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.585 0.877 0.870 0.833 0.500 0.769 2 1.886 1.859 1.833 1.SOS 1.783 1.759 1.736 1.713 1.690 1.668 1.647 1.626 1.528 1.440 1.361 3 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.444 2.402 2.361 2.322 2.283 2.106 1.952 1.816 4 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.102 3.037 2.974 2.914 2.555 2.539 2.362 2.166 5 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.696 3.605 3.517 3.433 3.352 2.991 2.689 2.436 6 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4.231 4.111 3.999 3.589 3.784 3.326 2.951 2.643 7 6.002 5.786 5.582 5.389 5.206 5.033 4.86S 4.712 4.564 4.423 4.288 4.160 3.605 3.161 2.802 S 6.733 6.463 6.210 5.971 5.747 5.535 5.335 5.146 4.96S 4.799 4.639 4.487 3.837 3.329 2.925 9 7.435 7.105 6.S02 6.515 6.247 5.995 5.759 5.537 5.328 5.132 4.946 4.772 4.031 3.463 3.019 10 8.111 7.722 7.360 7.024 6.710 6.415 6.145 5.889 5.650 5.426 5.216 5.019 4.192 3.571 3.092 11 8.760 8.306 7.887 7.499 7.139 6.805 6.495 6.207 5.938 5.687 5.453 5.234 4.327 3.656 3.147 12 9.385 S.563 8.354 7.943 7.536 7.161 6.314 6.492 6.194 5.918 5.660 5.421 4.439 3.725 3.190 13 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.750 6.424 6.122 5.542 5.583 4.533 3.780 3.223 14 10.563 9.899 9.295 8.745 S.244 7.786 7.367 6.982 6.628 6.302 6.002 5.724 4.611 3.824 3.249 15 11.118 10.350 9.712 9.10S 8.559 8.061 7.606 7.191 6.511 6.462 6.142 5.847 4.675 3.859 3.268 11.652 10.838 10.106 9.447 S.S51 8.313 7.824 7.379 6.974 6.604 6.265 5.954 4.730 3.857 3.283 17 12.166 11.274 10.477 9.763 9.122 S.544 3.022 7.549 7.120 6.729 6.373 6.047 4.775 3.910 3.295 18 12.659 11.690 10.528 10.059 9.372 9.756 3.201 7.702 7.250 6.540 6.467 6.128 4.812 3.928 3.304 19 13.134 12.085 11.158 10.336 9.604 S.950 8.365 7.839 7.366 6.938 6.550 6.198 4.543 3.942 3.311 13.590 12.462 11.470 10.594 9.518 9.129 8.514 7.963 7.469 7025 6.623 6.259 4.870 3.954 3.316 22 14.451 13.163 12.042 11.061 10.201 9.442 8.772 8.176 7.645 7.170 6.743 6.359 4.909 3.970 3.323 24 15.247 13.799 12.550 11.469 10.529 9.707 8.955 8.348 7.784 7.283 6.835 6.434 4.937 3.981 3.327 25 15.622 14.094 12.783 11.654 10.675 9.823 9.077 S.422 7.843 7.330 6.873 6.464 4.948 3.985 3.329 30 17.292 15.372 13.765 12.409 11.255 10.274 9.427 8.694 5.055 7.496 7.003 6.566 4.979 3.995 3.332 35 18.665 16.374 14.498 12.948 11.655 10.567 9.644 8.555 8.176 7.586 7.070 6.617 4.992 3.998 3.333 40 19.793 17.159 15.046 13.332 11.925 10.757 9.779 5.951 8.244 7.634 7.105 6.642 4.997 3.999 3.333 16 20 Note: The present value (PV) annuity factor for N periods and a rate of 7 per period = [1 (1 + 7) = 7. For example, for N = 5 and r=0.10, the PV annuity factor = 3.791 (rounded) TABLE 1 Present Value of $1 6% 75 4 5 9 Periods 4% 5% S% 9% 10% 11% 12% 13% 14% 15% 20% 25% 30% 1 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.833 0.500 0.769 2 0.925 0.907 0.890 0.873 0.557 0.542 0.826 0.812 0.797 0.783 0.769 0.756 0.694 0.640 0.592 3 0.889 0.364 0.540 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.655 0.579 0.512 0.455 4 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.572 0.482 0.410 0.350 5 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.567 0.543 0.519 0.497 0.402 0.328 0.269 6 0.790 0.746 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.480 0.456 0.432 0.335 0.262 0.207 7 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.376 0.279 0.210 0.159 S 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.434 0.404 0.376 0.351 0.327 0.233 0.168 0.123 9 0.703 0.645 0.592 0.544 0.500 0.460 0.424 0.391 0.361 0.333 0.308 0.284 0.194 0.134 0.094 10 0.676 0.614 0.558 0.508 0.463 0.422 0.356 0.352 0.322 0.295 0.270 0.247 0.162 0.107 0.073 11 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0.237 0.215 0.135 0.036 0.056 12 0.625 0.557 0.497 0.444 0.397 0.356 0.319 0.286 0.257 0.231 0.208 0.187 0.112 0.069 0.043 13 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.25% 0.229 0.204 0.152 0.163 0.093 0.055 0.033 14 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.232 0.205 0.151 0.160 0.141 0.078 0.044 0.025 15 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.209 0.183 0.160 0.140 0.123 0.065 0.035 0.020 16 0.534 0.458 0.394 0.339 0.292 0.252 0218 0.18 0.163 0.141 0.123 0.107 0.054 0.028 0.015 17 0.513 0.436 0.371 0.317 0.270 0.231 0.198 0.170 0.146 0.125 0.108 0.093 0.045 0.023 0.012 18 0.494 0.416 0.350 0.296 0.250 0.212 0.10 0.153 0.130 0.111 0.095 0.081 0.035 0.018 0.009 19 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.138 0.116 0.098 0.083 0.070 0.031 0.014 0.007 20 0.456 0.377 0.312 0.25% 0.215 0.178 0.149 0.124 0.104 0.087 0.073 0.061 0.026 0.012 0.005 22 0.422 0.342 0.278 0.226 0.184 0.150 0.123 0.101 0.083 0.068 0.056 0.046 0.018 0.007 0.003 24 0.390 0.310 0.247 0.197 0.158 0.126 0.102 0.002 0.066 0.053 0.043 0.035 0.013 0.005 0.002 25 0.375 0.295 0.233 0.134 0.146 0.116 0.092 0.074 0.059 0.047 0.035 0.030 0.010 0.004 0.001 30 0.308 0.231 0.174 0.131 0.099 0.075 0.057 0.044 0.033 0.026 0.020 0.015 0.004 0.001 0.000 35 0.253 0.151 0.130 0.094 0.068 0.049 0.036 0.026 0.019 0.014 0.010 0.008 0.002 0.000 0.000 0.208 0.142 0.097 0.067 0.046 0.032 0.022 0.015 0.011 0.008 0.005 0.004 0.001 0.000 0.000 40 Note: The present value (PV) factor for N periods and rate 7 per period = 1 = (1 + 7. For example, the PV factor for 10%. 5 years = 1 = (1 + 0.1035 = 0.621 (rounded)