1-(30p) XYZ Co. is considering the purchase of a new (digital) equipment to replace the old (manual) equipment currently being used in its production process. The data regarding the new and the old equipments are written below: The old (manual) equipment had cost $800,0003 years ago, and it can be used for five more years. It has a current salvage value of $410,000. If the old equipment is held until the end of its useful life, it would not have any salvage value. The new (digital) equipment costs $570,000, and $30,000 must be paid for installation. Its final salvage value is estimated to be $70,000 at the end of its five-year useful life. Both the old and the new machines are depreciated according to the straight-line method. The new machine will increase operating revenues by $100,000 annually and increase operating expenses by $10,000 annually. Net working capital expenses will decrease by $50,000 over the life of the project. Income taxes on incremental profits are paid at a 30 percent rate. With the information above, calculate; a) Initial cash outflow, b) Interim incremental net cash flows for years 1 through 5 , c) Terminal year incremental net cash flow. 2-(30p)If you were to be the CFO of XYZ Co., what would be your final decision about this replacement project on Q1. Evaluate the project by using capital budgeting techniques namely, PBP, NPV, PI, IRR and MIRR. The minimum required rate for the company is 10%, and maximum PBP for similar projects is two years. (For PBP demonstrate the payback time in months and days and for each of the techniques approve or reject separately)