is set Miler Corporation is considering replacing a machine. The replacement will reduce operating expenses (that is increase earnings beforedepreciation Interest, and taxes) by 520,000 per year for each of the 5 years the new machine is expected to last. Although the old machine has zero book value, it can be used for 5 more years. The depreciable value of the new machine is $55,000. The firm will depreciate the machine under MACRS using a 5-year recovery and is subject to a 40 tax race. Estimate the incremental operating cash inflows generated by the replacement. (Note: Be sure to consider the depreciation in year 6.) Year ncremental profits before depreciation and taxes Less: Depreciation Net profits before taxes Taxes Net profits after taxes Operating cash flows Recovery 5 years MACRS Year 204 32% 194 124 1291 SH 4 5