Rocky Corporation is considering replacing equipment. The replacement will reduce operating…

Rocky Corporation is considering replacing equipment. The replacement will reduce operating expenses (that is, increase earnings before depreciation, interest, and taxes) by $25000, 30000, 35000, 35000, and 40000 per year for the next 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 $60,000. The firm will depreciate the machine under MACRS using a 5-year recovery period (30%, 32%, 19%, 12%, 12%, and 5% the applicable depreciation percentages) and is subject to a 40% tax rate. Estimate the incremental operating cash inflows generated by the replacement.