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Replacement Situation  

In the case of replacement of an existing machine (asset) by a new one, the relevant cash outflows are after-tax incremental cash fouls If·a new machine is intended to replace an existing machine, the proceeds so ‘obtained from its sale reduce cash outflows ‘required Iv purchase the new machine and, hence, part of relevant cash flows. Tile calculation of after-tax irtcrem rental cash outflows is illustrated in Format 10,3 and Format lO A which providede precia  in the case of replacement situations

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