Frankfurt Company is replacing an old machine that was purchased 5 years ago at a cost of 500,000. It's being depreciated on a straight line basis to a zero salvage value over an original ten year life. It's has a current market value of $180,000. The new machine will cost $250,000 and will last 5 years at which time it will have a salvage value of $40,000. It is in the three-year ACRS class (.33, .45, 15, 7). The machine will not change sales but will reduce operating expenses by $48,000 per year. Net Working Capital will increase by $10,000 if the new machine is purchased. Tax rate is 40%. Set up the cash flows for each individual period.
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