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 $$2,220$ in Year $1$; $$3,552$ in Year $2$; $$2,109$ in Year $3$; $$1,332$ in both Year $4$ and Year $5$; and $$555$ 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$.$

Data table

$($Click on the icon here $$ in order to copy the contents of the data table below into a spreadsheet.$)$