Wilber Corporation is considering replacing a machine. The replacement will cut

Question

Wilber Corporation is considering replacing a machine. The replacement will cut operating expenses by $24,000 per year for each of hte 5 years the machine is expected to last. Although the old machine has a zero book value, it has a remaining useful life of 5 years. Ther depreciable value of hte new machine is $72,000. Wilber will depreiciate the machine under MACRS using a 5 year recovery. It is subject to a 40% tax rate on ordinary income. Estimate the incremental operating cash flows atributable to thereplacment.

Explanation / Answer

Hello Pal,

First of all a very nice as well as intersting question from your side.

So now straight to the question, as asked above with all the information available from your side and from mine, the answer is as under:

After calculation of the above given information, we can conclude that the answer will be $40000 (approx).

That is all I can say from the above given information by you, hope have solved your problem to some extent.

Regards.

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