1. Alysia's Dance Company, Inc., a manufacturer of dance and exercise apparel, is considering replacing an existing piece of equipment with a more sophisticated machine. The following information is given. Project Information Existing Machine Proposed Machine Cost = $100,000 Cost = $150,000 Purchased 2 years ago Installation = $20,000 Depreciated with MACRS 5 year schedule Depreciated with MACRS 5 year schedule Current market value = $105,000 Year Earnings before Depreciation and Taxes Existing Machine Proposed Machine 1 $160,000 Year 1 $170,000 2 150,000 2 170,000 3 140,000 3 170,000 4 140,000 4 170,000 5 140,000 5 170,000 The firm pays 40% taxes on ordinary income and capital gains. The old machine will have no market (salvage) value after five more years of use. The new machine can be sold for $40,000 after five years of use. There is no change in working capital required for the project. Calculate the following: a. The initial investment b. The after-tax incremental cash flows c. The terminal value (cash flows) d. The NPV and MIRR if the company's WACC is 9.4%. Should they replace the old machine