Miller corporation is considering replacing a machine. the replacement will reduce operating expenses (that is, increase earnings before depreciation, interest, and taxes) by $ 18 comma 000 per year for each of the 5 years the new machine is expected to last. although the old machine has zero book value, it can be used for 5 more years. the depreciable value of the new machine is $ 40 comma 000. the firm will depreciate the machine under macrs using a 5-year recovery and is subject to a 40 % tax rate. estimate the incremental operating cash inflows generated by the replacement. (note: be sure to consider the depreciation in year 6.)
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