a question about the replacement project
Let’s say:
Old machine: depreciation expense:1,800
New machine:
Revenue-cost: 8,000
Tax: 40%
depreciation expense: 5,000
as the old machine is not fully depreciated, for the operating cash flow in year 1, 2, 3…should we include the effect of depreciation expense of old machine?
-
8000 (0.6) + 5000 (0.4)
-
8000 (0.6) + (5000-1800)0.4
any idea which one is right?