Net cash flows Central Laundry and Cleaners is considering replacing an existing piece of machinery with a more sophisticated machine. The old machine was purchased 3 years ago at a cost of $49,000, and this amount was being depreciated under MACRS using a 5-year recovery period. The machine has 5 years of usable life remaining. The new machine that is being considered costs $75,300 and requires $4,500 in installation costs. The new machine would be depreciated under MACRS using a 5-year recovery period. The firm can currently sell the old machine for $55,400 without incurring any removal or cleanup costs. The firm is subject to a tax rate of 21%. The revenues and expenses (excluding depreciation and interest) associated with the new and the old machines for the next 5 years are given in the table . (Table contains the applicable MACRS depreciation percentages.) Note: The new machine will have no terminal value at the end of 5 years. a. Calculate the initial cash flow associated with replacement of the old machine by the new one. b. Determine the periodic cash flows associated with the proposed replacement. (Note: Be sure to consider the depreciation in year 6.) c. Depict on a time line the net cash flows found in parts (a) and (b) associated with the proposed replacement decision. a. Calculate the initial cash flow associated with replacement of the old machine by the new one. Calculate the initial cash flow below: (Round to the nearest dollar.) Cost of new asset Installation costs Total cost of new asset Proceeds from sale of old asset Tax on sale of old asset Total proceeds, sale of old asset Initial cash flow b. Determine the periodic cash flows associated with the proposed replacement. (Note: Be sure to consider the depreciation in year 6.) Calculate the cash flows with the old machine below: (Round to the nearest dollar.)Year Profit before depreciation and taxes Depreciation Net profit before taxes Taxes Net profit after taxes Operating cash inflows (Round to the nearest dollar.)Year 2 Profit before depreciation and taxes Depreciation Net profit before taxes Taxes Net profit after taxes Operating cash inflows (Round to the nearest dollar.)Year 3 Profit before depreciation and taxes Depreciation Net profit before taxes Taxes Net profit after taxes Operating cash inflows (Round to the nearest dollar.)Year Profit before depreciation and taxes Depreciation Net profit before taxes Taxes Net profit after taxes Operating cash inflows (Round to the nearest dollar.)Year Profit before depreciation and taxes Depreciation Net profit before taxes Taxes Net profit after taxes Operating cash inflows (Round to the nearest dollar.)Year Profit before depreciation and taxes Depreciation Net profit before taxes Taxes Net profit after taxes $ Operating cash inflows $ Calculation the cash flows with the new machine and the net incremental cash flows below: (Round to the nearest dollar.)Calculation the cash flows with the new machine and the net incremental cash flows below: (Round to the nearest dollar.) Year Profit before depreciation and taxes $ Depreciation Net profit before taxes Taxes Net profit after taxes $ Operating cash inflows $ Incremental cash flows (Round to the nearest dollar.)Year 2 Profit before depreciation and taxes Depreciation Net profit before taxes Taxes Net profit after taxes Operating cash inflows $ Incremental cash flows (Round to the nearest dollar.)Year Profit before depreciation and taxes Depreciation Net profit before taxes Taxes Net profit after taxes Operating cash inflows Incremental cash flows (Round to the nearest dollar.)Year Profit before depreciation and taxes Depreciation Net profit before taxes Taxes Net profit after taxes Operating cash inflows Incremental cash flows $ (Round to the nearest dollar.)Year Profit before depreciation and taxes Depreciation Net profit before taxes Taxes Net profit after taxes Operating cash inflows Incremental cash flows (Round to the nearest dollar.)Year Profit before depreciation and taxes Depreciation Net profit before taxes Taxes Net profit after taxes $ Operating cash inflows $ Incremental cash flowsc. Depict on a time line the net cash flows found in parts (a) and {b} associated with the proposed replacement decision. The time line for the net incremental cash flows is shown below: [Select the best choice below.) {"1 A. Year 0 1 2 3 4 5 6 Cash flow - 849.000 $13651 814.082 $9.464 810.385 $13545 8838 {"1 E. Year 0 1 2 3 4 5 6 Cash flow $13651 814.082 $9.464 810.385 $13545 8838 {"1 C. Year 0 1 2 3 4 5 6 bllllll Cash flow 879.800 $13651 814.082 $9.464 810.385 $13545 8838 {"3. D. Year 0 1 2 3 4 5 6 bllllll Cash flow - 833.050 $13651 814.082 $9.464 810.385 $13545 8838 Data table (Click on the icon here T- in order to copy the contents of the data table below into a spreadsheet} Newr machine Old machine Expenses Expenses [excluding depreciation {excluding depreciation Year Revenue and interest} Revenue and interest] 1 $?50:400 $?20:300 $675,000 $659,500 2 750,400 720300 677000 6595500 3 750,400 720300 681000 6595500 4 750,400 720300 679000 6595500 5 750,400 720300 675000 6595500 .@ Data table (Click on the icon here .1 in order to copy the contents of the data table below 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% 20% 14% 10% 2 45% 32% 25% 18% 3 15% 19% 18% 14% 4 ?% 12% 12% 12% 5 12% 9% 9% 6 5% 9% 8% ? 9% ?% 8 4% 6% 9 6% 10 6% 11 4% Totals 100% 100% 100% 100% *These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purposes. be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year convention. .@