Math  /  Data & Statistics

QuestionOperating 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 $2,380\$ 2,380 in Year 1, $3,808\$ 3,808 in Year 2; $2,261\$ 2,261 in Year 3; $1,428\$ 1,428 in both Year 4 and Year 5; and $595\$ 595 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 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 belo \begin{tabular}{|c|c|} \hline Year & 1 \\ \hline Revenue & \$ \\ \hline Expenses (excluding depreciation and interest) & \$ \\ \hline Profit before depreciation and taxes & \$ \\ \hline Depreciation & \$ \\ \hline Net profit before taxes & \$ \\ \hline Taxes & \$ \\ \hline Net profit after taxes & \$ \\ \hline Operating cash flows & \$ \\ \hline \end{tabular}
Data table \begin{tabular}{|c|c|c|c|c|} \hline \multicolumn{5}{|l|}{(Click on the icon here in order to copy the contents of the data table below into a spreadsheet)} \\ \hline & \multicolumn{2}{|r|}{New Lathe} & \multicolumn{2}{|c|}{Old Lathe} \\ \hline Year & Revenue & \begin{tabular}{l} Expenses \\ (excluding depreciation and interest) \end{tabular} & Revenue & \begin{tabular}{l} Expenses \\ (excluding depreciation and interest) \end{tabular} \\ \hline 1 & \$39,700 & \$30,100 & \$34,800 & \$23,800 \\ \hline 2 & 40,700 & 30,100 & 34,800 & 23,800 \\ \hline 3 & 41,700 & 30,100 & 34,800 & 23,800 \\ \hline 4 & 42,700 & 30,100 & 34,800 & 23,800 \\ \hline 5 & 43,700 & 30,100 & 34,800 & 23,800 \\ \hline \end{tabular}

Studdy Solution
Depict incremental cash inflows on a timeline:
Year12345Incremental Cash Inflows112\begin{array}{c|c|c|c|c|c} \text{Year} & 1 & 2 & 3 & 4 & 5 \\ \hline \text{Incremental Cash Inflows} & 112 & \ldots & \ldots & \ldots & \ldots \\ \end{array}
The incremental cash inflows for Year 1 is:
112 \boxed{112}

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