1st blank: $980, $1680, $2800, $2380

2nd blank: bad,good

3rd blank: the irr is small, the npv is negative, the MIRR is lower than the IRR

8. Replacement analysis Purple whale Inc. is a company that produces Widgets, among several other products. Suppose that purple whale inc. considers replacing its old machine used to make iwidgets with a more efficient one, which would cost $1,700 and require $380 annually in operating costs except depreciation. After-tax salvage value of the old machine is $700, while its annual operating costs except depreciation are $1,000 Assume that, regardless of the age of the equipment, purple whale Inc.'s sales revenues are fixed at $4,500 and depreciation on the old machine is $700 Assume also that the tax rates 40% and the project's risk-adjusted cost of capital, r, s the same as weighted average cost of capital (WACC) and equals 10%. and they are constant over four Based on the data, net cash flows (NCFS) before replacement are years Although Purple whale Inc. 's NCFs before replacement are the same over the four-year period, its NCFs after replacement vary annually. The following table shows depreciation rates ower four years. Year 1 Year 2 Year 3 Year Depreciation rates 33.33% 44 45% 14 81% 7.41% complete the following table and calculete incremental cash flows in each year Hint: Round your answers to the nearest dollar and remember toenter a minus sign if the calculated volue is negative Year 0 Year 1 Year 2 Year 3 Year 4 New machine cost After-tax salvage value, old machine Sales revenues Operating costs except deprecietion $1,700 $700 4,5004,500 $380 $4,500 $380 $4,500 $380 $380 operating income After-tax operating income Net cash flows after replacement (adding back depreciation) Incremental Cash Flows Next evaluate the incremental fiows by calculating the net present value (NPV), the internal rate of return (IRR), and the modified IRR (MIRR) Assume again that the cost of financing the new project is the same as the wAcc and equals 10% Hint: Use a spreadsheet program's functions or use a financial caculator for this task. NPV IRR MIRR Evaluation Based on the evaluation, replacing the old equipment appears to be a decision becavse