Consider a machine replacement project where the old machine has $5279 depreciat

Question

Consider a machine replacement project where the old machine has $5279 depreciation per year for the next five machine will have $6733 depreciation per year for the next five years. If the firm's tax rate is 30 percent, calculate the annual incremental cash flow due to the change in depreciation expense (do not ignore the tax effect) Answer: Check Consider a machine replacement project where the old machine has $7307.7 depreciation per year for the next five new machine will have $6748 depreciation per year for the next five years. If the firm's tax rate is 30 percent, calculate the annual incremental cash flow due to the change in depreciation expense (do not ignore the tax effect). Answer: Check

Explanation / Answer

a Annual Incremental Cash flow=(6733-5279)*.30 436.20 b Annual Incremental Cash flow=(6748-7303.7)*.30 -166.71

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