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The Caribbean company - Hispaniola is considering replacing two machines that have three (3) years of used for a more efficient one. The two machines could be sold for a total of $70.000 in the secondary market, but they will not have residual value sum if they stay in use until the end of its utility life, its original bases of depreciation totalized $300,000. Both have a value in books (depreciated tax. book value) of $86.400 and life utility of eight yearson the new machine. The method of depreciation used for both machines is Modified Accelerated Cost Recovery System (MACRS) and are considered active to five-year property class. The new machine can be acquired and be installed for $480,000. It has a utility life of eight (8) years and a waited for residual value of $40,000. The machine is catalogued like five-year (5) property class for intentions of accelerated COST recovery (depreciation). Due to its great efficiency, the Caribbean Hispaniola hopes that the machine realizes operational savings annual increment sales of $100,000. The corporative rate of tax is 40%, and if it happens a lost one in anyone of the years of the project, it is assumed that the company can cancel the lost one against other income of the company.
Explain in detail, what are the cash inflows through the eight years, and in which is the incremental cash outflow to time 0?
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