9. Haw Par Industries (HPI) is a major supplier of herbs to all Chinese Medical Halls in the country. It needs to purchase a new fully automated process line costing $900,000. Modification to the equipment, shipping and freight insurance will costs another $200,000. This proposed new equipment will be depreciated using straight-line depreciation towards an estimated $100,000 salvage value over its 4-year project life. If the proposed new equipment are purchased, it will replace the existing one purchased 4 years ago at an installed cost of S400,000.00. The existing equipment, depreciated on a straight-line basis towards zero salvage value, will be worthless at the end of its 8 years useful life. but can be sold today for $210.000.00. HPI expects to increase its sales by $345,000.00 but operating expenses will also increase by $28,000.00. The increase in sales and operating expenses are expected to be constant during its project life. Net operating working capital is also expected to increase by $35,000.00. This investment is expected to be fully recovered at the end of its project life. HPI has already spent $50,000.00 on consultancy work to conform with the requirements set by the Environmental Agency. The company cost of capital is 10% and is in the 30% tax bracket. a Should HPI proceced with the replacement? [Hint: Use the NPV & IRR criteria in your decision making] b. What does it mean that only relevant cash flows should be included estimating cash flow based on the information available in the above question a nd demonstrate with examples. your