How would you set up an operating cash flow statement

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Question - Hupana Shoe Company is considering replacing a five-year old shoe gluing machine that originally cost $60,000. It was being depreciated using straight-line to an expected salvage value of zero over its original 10-year life and could now be sold for $45,000. The replacement machine would cost $150,000 and have a five-year expected life. It would be depreciated using the MACRS 5-year class life. The actual expected salvage value of this machine after five years is $20,000. The new machine is expected to operate much more efficiently, saving $5,000 per year in energy costs. In addition, it will eliminate one salaried position saving another $44,000 annually. The firm's marginal tax rate is 30% and the WACC is 8.5%. How would you set up an operating cash flow statement to use to find the payback period, discounted payback, NPV, IRR and MIRR of the replacement project?

Reference no: EM133022985

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