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Relevant cash flowsNo terminal value Central Laundry and Cleaners is considering replacing an existing piece of machinery with a more sophisticated machine. The old machine was purchased 3 years ago at a cost of $51,700, and this amount was being depreciated under MACRS using a 5-year recovery period. The machine has 5 years of usable life remaining. The new machine that is being considered costs $75,700 and requires $3,900 in installation costs. The new machine would be depreciated under MACRS using a 5-year recovery period. The firm can currently sell the old machine for $54,200 without incurring any removal or cleanup costs. The firm is subject to a tax rate of 40%. The revenues and est) associated with the new and the old machines for the next 5 years are given in the table (Table contains the applicable MACRS depreciation percentages.) Note: The new machine will have no terminal value at the end of 5 years. A Data Table a. Calculate the initial investment associated with replacement of the old machine by the new one. b. Determine the incremental operating cash inflows associated with the proposed replacement. (Note: Be sure to consider the depreciation in year 6.) c. Depict on a time line the relevant cash flows found in parts (a) and (b) associated with the proposed replacement decision. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) a. Calculate the initial investment associated with replacement of the old machine by the new one. New machine Old machine Calculate the initial investment below. (Round to the nearest dollar.) Expenses Expenses (excluding depreciation and (excluding depreciation and Cost of new asset Year Revenue interest) Revenue interest) Installation costs $750,100 $720,700 $674,800 $659,500 750,100 720,700 676,800 659,500 Total cost of new asset 750,100 720,700 680,800 659,500 Proceeds from sale of old asset 750,100 720,700 678,800 659,500 750,100 720,700 674,800 659.500 Tax on sale of old asset Total proceeds, sale of old asset Print Done Initial investment 8-NM S A Data Table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year Recovery year 3 years 5 years 7 years 20% 14% 45% 32% 25% 15% 19% 18% 7% 12% 12% 12% 33% 10 years 10% 18% 14% 12% 9% 8% 7% 6% 6% 5% 6% Totals 100% 4% 100% 100% 100% Print Done Enter any number in the edit fields and then click Check