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 $2,300 in Year 1; $3,680 in Year 2; $2,185 in Year 3; $1,380 in both Year 4 and Year 5; and $575 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 (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) $31,300 31,300 31,300 31,300 31,300 Expenses (excluding depreciation and interest) $25,000 25,000 25,000 25,000 25,000 Year Revenue $38,200 39,200 40,200 41,200 42,200 Revenue $33,700 33,700 33,700 33,700 33,700 2 3 4