Miller Corporation is considering replacing a machine. The replacement will reduce operating expenses (that is, increase earnings beforedepreciation, interest, and taxes) by $20,000 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 rate. Estimate the incremental operating cash inflows generated by the replacement. (Note: Be sure to consider the depreciation in year 6.)

Year	1	2	3	4	5	6
Incremental profits before depreciation and taxes	Blank 1. Fill in the blank, read surrounding text.	Blank 2. Fill in the blank, read surrounding text.	Blank 3. Fill in the blank, read surrounding text.	Blank 4. Fill in the blank, read surrounding text.	Blank 5. Fill in the blank, read surrounding text.	Blank 6. Fill in the blank, read surrounding text.
Less: Depreciation	Blank 7. Fill in the blank, read surrounding text.	Blank 8. Fill in the blank, read surrounding text.	Blank 9. Fill in the blank, read surrounding text.	Blank 10. Fill in the blank, read surrounding text.	Blank 11. Fill in the blank, read surrounding text.	Blank 12. Fill in the blank, read surrounding text.
Net profits before taxes	Blank 13. Fill in the blank, read surrounding text.	Blank 14. Fill in the blank, read surrounding text.	Blank 15. Fill in the blank, read surrounding text.	Blank 16. Fill in the blank, read surrounding text.	Blank 17. Fill in the blank, read surrounding text.	Blank 18. Fill in the blank, read surrounding text.
Taxes	Blank 19. Fill in the blank, read surrounding text.	Blank 20. Fill in the blank, read surrounding text.	Blank 21. Fill in the blank, read surrounding text.	Blank 22. Fill in the blank, read surrounding text.	Blank 23. Fill in the blank, read surrounding text.	Blank 24. Fill in the blank, read surrounding text.
Net profits after taxes	Blank 25. Fill in the blank, read surrounding text.	Blank 26. Fill in the blank, read surrounding text.	Blank 27. Fill in the blank, read surrounding text.	Blank 28. Fill in the blank, read surrounding text.	Blank 29. Fill in the blank, read surrounding text.	Blank 30. Fill in the blank, read surrounding text.
Operating cash flows	Blank 31. Fill in the blank, read surrounding text.	Blank 32. Fill in the blank, read surrounding text.	Blank 33. Fill in the blank, read surrounding text.	Blank 34. Fill in the blank, read surrounding text.	Blank 35. Fill in the blank, read surrounding text.	Blank 36. Fill in the blank, read surrounding text.

MACRS
Recovery Year	5 Years
1	20%
2	32%
3	19%
4	12%
5	12%
6	5%