Operating cash inflows Strong Tool Company has been considering purchasing a new lathe to replace a fully depreciated lathe that would otherwise last 5 more years. The new lathe is expected to have a 5-year life and depreciation charges of $2,400 in Year 1: $3,840 in Year 2: $2.280 in Year 3; $1,440 in both Year 4 and Year 5, and $600 in Year 6. The firm estimates the revenues and expenses (excluding depreciation and interest) for the new and the old lathes to be as shown in the following table . The firm is subject to a 40% tax rate on ordinary income. a. Calculate the operating cash inflows associated with each lathe. (Note: Be sure to consider the depreciation in year 6.) b. Calculate the operating cash inflows resulting from the proposed lathe replacement. c. Depict on a time line the incremental operating cash inflows calculated in part b a. Calculate the operating cash inflows associated with the new lathe below: Round to the nearest dollar.) Year Revenue Expenses (excluding depreciation and interest) Profit before depreciation and taxes $ Net profit before taxes Taxes Net profit after taxes Operating cash flows (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) New Lathe Old Lathe Expenses (excluding depreciation and interest) $28,700 28,700 28,700 28,700 28,700 Expenses (excluding depreciation and interest) $25,900 25,900 25,900 25,900 25,900 Year Revenue $40,100 41,100 42,100 43,100 44,100 Revenue $33,300 33,300 33,300 33,300 33,300 4 Operating cash inflows Strong Tool Company has been considering purchasing a new lathe to replace a fully depreciated lathe that would otherwise last 5 more years. The new lathe is expected to have a 5-year life and depreciation charges of $2,400 in Year 1: $3,840 in Year 2: $2.280 in Year 3; $1,440 in both Year 4 and Year 5, and $600 in Year 6. The firm estimates the revenues and expenses (excluding depreciation and interest) for the new and the old lathes to be as shown in the following table . The firm is subject to a 40% tax rate on ordinary income. a. Calculate the operating cash inflows associated with each lathe. (Note: Be sure to consider the depreciation in year 6.) b. Calculate the operating cash inflows resulting from the proposed lathe replacement. c. Depict on a time line the incremental operating cash inflows calculated in part b a. Calculate the operating cash inflows associated with the new lathe below: Round to the nearest dollar.) Year Revenue Expenses (excluding depreciation and interest) Profit before depreciation and taxes $ Net profit before taxes Taxes Net profit after taxes Operating cash flows (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) New Lathe Old Lathe Expenses (excluding depreciation and interest) $28,700 28,700 28,700 28,700 28,700 Expenses (excluding depreciation and interest) $25,900 25,900 25,900 25,900 25,900 Year Revenue $40,100 41,100 42,100 43,100 44,100 Revenue $33,300 33,300 33,300 33,300 33,300 4