Operating cash inflowsStrong 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 $2,120 in Year 1; $3,392 in Year 2; $2,014 in Year 3; $1,272 in both Year 4 and Year 5; and $530 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

New Lathe Old Lathe Year Revenue Expenses (excluding depreciation and interest) Revenue Expenses (excluding depreciation and interest) 1 R1 30,000 34,000 24,400 2 R2 30,000 34,000 24,400 3 R3 30,000 34,000 24,400 4 R4 30,000 34,000 24,400 5 R5 30,000 34,000 24,400

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.