(50 points) 5. You recently began working for the Orange Fizz Company. Management is contemplating the replacement of its existing, three-year old (third-year depreciation completed) bottling machines, originally costing $17,000,000, with newer and more efficient machines. The old (existing) machines were placed on the MACRS five-year class life depreciation schedule (assuming half-year convention) three-years ago. Total operating costs for the old bottling machines are $5,300,000 per year and Orange Fizz will bottle 50 million (50,000,000) bottles per year each year for the next seven years. The firm expects to realize a $1,000,000 return from salvaging the old machines in 7 years; however, the existing machines may be sold now to another firm in the industry for $2,500,000. If Orange Fizz retains the old machines, they would remain operational for the next 7-years. The new bottling machines, if purchased, would cost $20,000,000 and would be placed on MACRS five-year class life depreciation and will remain in operation for the next 7 years. The new machines are expected to have a salvage value of $2,500,000 in seven years. Total annual incremental savings in operating costs of $0.08 per bottle will be realized if the new bottling machines are installed. The company is in the 26% income tax bracket and it has a 10% WACC. Determine if the replacement should occur by estimating the replacement project's NPV and IRR. Use Excel and attach, to this word document, the Excel Spreadsheet that you use to solve the problem. This problem is similar to the Johnson and Carleton problem spreadsheet previously provided to you. Use a relative (incremental) cash flow analysis similar to the Johnson and Carleton example problem and other problems covered in handouts and in your text. Please, in addition to this exam, attach your excel spreadsheet to Canvas, as well as attach a picture of your spreadsheet to this completed final exam. Project's NPV and IRR are