1 12 $10 9 CO .8 5 3 Sign in is not complete x VA Welcome to VA Insider - VA INSI X Lu Homework: Discount Cash-Flow X Question 7 - Homework: Discour X + ( - C D A ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%2525%252FIms.mheducation.com%252Fmghmiddleware%252Fmheproducts%252FImsCloseWindow.htm#/activity/questi Homework: Discount Cash-Flow Analysis Assignment Saved PC Shopping Network may upgrade its modem pool. It last upgraded 2 years ago, when it spent $155 million on equipment with an assumed life of 5 years and an assumed salvage value of $20 million for tax purposes. The firm uses straight-line depreciation. The old equipment can be sold today for $120 million. A new modem pool can be installed today for $180 million. This will have a 3-year life and will be depreciated to zero using straight-line depreciation. The new equipment will enable the firm to increase sales by $33 points million per year and decrease operating costs by $10 million per year. At the end of 3 years, the new equipment will be worthless. Assume the firm's tax rate is 30% and the discount rate for projects of this sort is 10%. Required: eBook a. What is the net cash flow at time 0 if the old equipment is replaced? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) b. What are the incremental cash flows in years (i) 1; (ii) 2; (iii) 3? (Do not round intermediate calculations. Enter your answer in Print millions rounded to 2 decimal places.) c. What is the NPV of the replacement project? (Do not round intermediate calculations. Enter the NPV in millions rounded to 2 decimal places.) d. What is the IRR of the replacement project? (Do not round intermediate calculations. Enter the IRR as a percent rounded to 2 decimal places.) a. Net cash flow million b. Incremental cash flow million per year C . NPV million d. IRR %