What is the incremental cash flow between machines B and A for different years?

For the cash flows shown, determine the incremental cash flow between machines B and A for (a) year 0, (b) in year 3, and (c) in year 6. The incremental cash flow between machines B and A is as follows: (a) Year 0: 0 (b) Year 3: -15000 (c) Year 6: -12000

Calculation of Incremental Cash Flow

To determine the incremental cash flow between machines B and A, we need to calculate the difference in cash flows for each year.

Year 0

The incremental cash flow in year 0 is the difference between the cash flow of machine B and machine A. From the given information, the cash flow for machine B in year 0 is -10000, and for machine A, it is also -10000. Therefore, the incremental cash flow in year 0 is:

Incremental cash flow = Cash flow of machine B - Cash flow of machine A

Incremental cash flow = -10000 - (-10000)

Incremental cash flow = 0

Year 3

The incremental cash flow in year 3 is the difference between the cash flow of machine B and machine A. From the given information, the cash flow for machine B in year 3 is -1800, and for machine A, it is 13200. Therefore, the incremental cash flow in year 3 is:

Incremental cash flow = Cash flow of machine B - Cash flow of machine A

Incremental cash flow = -1800 - 13200

Incremental cash flow = -15000

Year 6

The incremental cash flow in year 6 is the difference between the cash flow of machine B and machine A. From the given information, the cash flow for machine B in year 6 is 1200, and for machine A, it is 13200. Therefore, the incremental cash flow in year 6 is:

Incremental cash flow = Cash flow of machine B - Cash flow of machine A

Incremental cash flow = 1200 - 13200

Incremental cash flow = -12000

Therefore, the incremental cash flow between machines B and A is as follows:

(a) Year 0: 0

(b) Year 3: -15000

(c) Year 6: -12000

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