Operating cach Inflows Afirm is considerin enewing its equipment to meet increased d ad demand for its product. The cost of equipment modifications is $1.99 million plus $100,000 in installation costs. The firm will depreciate the equipment modifications under MACRS, using a 5-year recovery period (see table 1). Additional sales revenue from the renewal should amount to $1.27 million per year, and additional operating expenses and other costs (excluding depreciation and interest) will amount to 36% of the additional sales. The firm is subject to a tax rate of 40%. (Note: Answer the following questions for each of the next 6 years.) ult from the renewal? What incremental eamings before depreciation, interest, and taxes will result fr What after taxes will result from the renewal? Al not opening pr a. What incremental operating cash inflows w result from the a. The incremental profits before depreciation and tax are $ (Round to the nearest dollar.) b. Calculate the incremental net operating profits after taxes below: (Round to the nearest dollar.) Year Profit before depreciation and taxes Depreciation Net profit before taxes Taxes Net profit after taxes (Round to the nearest dollar.) Year Profit before depreciation and taxes Depreciation Net profit before taxes Net profit after taxes (Round to the nearest dollar.) Year Profit before depreciation and taxes Depreciation Net profit before taxes Taxes Net profit after taxes (Round to the nearest dollar.) Year Profit before depreciation and taxes Depreciation Net profit before taxes Net profit after taxes (Round to the nearest dollar) Year Profit before depreciation and taxes Depreciation Net profit before taxes Net profit after taxes $ 3 5 (Round to the nearest dollar) Year Profit before depreciation and tax Depreciation Net profit before taxes Taxas Net profit after taxes o. For year 1, the incremental operating cash flow will be $ For year 2, the incremental operating cash flow will be $ For year 3, the incremental operating cash flow will be $ For year 4, the incremental operating cash flow will be $ For year 5, the incremental operating cash flow will be $ For year 6, the incremental operating cash flow will be $ 1: Data Table (Round to the nearest dollar.) (Round to the nearest dollar) (Round to the nearest dollar. (Round to the nearest dollar) (Round to the nearest dollar.) (Round to the nearest dollar) (Click on the icon located on the top-right comer of the data table below in order to copy its contents into a spreadsheet) Rounded Depreciation Percentages Recovery Year Using MACR8 for First Four Property Classes Percentage by recovery year* Recovery year 3 years 6 years 7 years 20% 14% 4G% 32% 25% 18% 15% 19% 18% 14% 7% 12% 12% 12% 12% 9% 9% 5% 9% 8% 9% 7% 8 4% 6% 65% 11 Totals 100% 4% 100% "These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year convention