Question: please answer all parts round to the nearest dollar Operating cash inflows Strong Tool Company has been considering purchasing a new lathe to replace a
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 $2,000 in Year 1; $3,200 in Year 2, $1,900 in Year 3; $1,200 in both Year 4 and Year 5; and $500 in Year 6. The firm estimates the revenues and expenses (excluding depreciation and interest) for the new and the old lathes to be as shown in the following table The firm is subject to a 40% tax rate on ordinary income. a. Calculate the operating cash inflows associated with each lathe. (Note: Be sure to consider the depreciation in year 6.) b. Calculate the operating cash inflows resulting from the proposed lathe replacement. c. Depict on a time line the incremental operating cash inflows calculated in part b. a. Calculate the operating cash inflows associated with the new lathe below: (Round to the nearest dollar.) Year Revenue Expenses (excluding depreciation and interest) Profit before depreciation and taxes %24 Depreciation Net profit before taxes es Net profit after taxes 2$ Operating cash flows Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet) Old Lathe New Lathe Expenses (excluding depreciation and interest) $25,000 25,000 25,000 25,000 Expenses (excluding depreciation and interest) $30,000 Revenue Year Revenue $35,000 35,000 35,000 35.000 35,000 $40,000 41.000 42,000 30,000 30.000 30.000 30.000 2. 3. 43,000 4. 25.000 44,000 javascript:doExercise(2); 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 $2,000 in Year 1; $3,200 in Year 2, $1,900 in Year 3; $1,200 in both Year 4 and Year 5; and $500 in Year 6. The firm estimates the revenues and expenses (excluding depreciation and interest) for the new and the old lathes to be as shown in the following table The firm is subject to a 40% tax rate on ordinary income. a. Calculate the operating cash inflows associated with each lathe. (Note: Be sure to consider the depreciation in year 6.) b. Calculate the operating cash inflows resulting from the proposed lathe replacement. c. Depict on a time line the incremental operating cash inflows calculated in part b. a. Calculate the operating cash inflows associated with the new lathe below: (Round to the nearest dollar.) Year Revenue Expenses (excluding depreciation and interest) Profit before depreciation and taxes %24 Depreciation Net profit before taxes es Net profit after taxes 2$ Operating cash flows Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet) Old Lathe New Lathe Expenses (excluding depreciation and interest) $25,000 25,000 25,000 25,000 Expenses (excluding depreciation and interest) $30,000 Revenue Year Revenue $35,000 35,000 35,000 35.000 35,000 $40,000 41.000 42,000 30,000 30.000 30.000 30.000 2. 3. 43,000 4. 25.000 44,000 javascript:doExercise(2)
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