A small factory $is$ considering replacing its existing coining press with a newer, more efficient one. The existing press was purchased four years ago $at$ a cost $of$ $$870,000,$ and $itis$ being depreciated according $toa7-$year MACRS depreciation schedule $(note$ that the $7-$year schedule occurs over $8$ years$)$ and the first four years $of$ depreciation have been taken $(see$ below for MACRS chart$).$ Due $to$ good maintenance, the CFO estimates that the existing press has $5$ years $of$ useful life remaining. The purchase price for the new press $is$ $$1,250,000.$ The installation $of$ the new press would cost $an$ additional $$150,000,$ and the IRS requires this cost $tobe$ capitalized and added $to$ the depreciable base rather than expensed immediately $(depreciate$ $$1,400,000$ over the required period$).$ The new press $(if$ purchased$)$ would $be$ depreciated using the $5-$year MACRS depreciation schedule instead $of$ the $7-$year schedule. Interest expense associated with the purchase $of$ the new press $is$ estimated $tobe$ roughly $$125,000$ per year for the next $5$ years. The appeal $of$ the new press $is$ that $itis$ estimated $to$ produce a pre$-$tax operating cost savings $of$ $$400,000$ per year for the next $5$ years, and the new press also has a useful life $of5$ years. Also, $if$ the new press $is$ purchased, the old press can $be$ sold for $$200,000$ today. The CFO believes that the new press would $be$ sold for $$250,000at$ the end $of$ its $5-$year useful life. Assume that $NWC$ would not $be$ affected. The company has $an$ average tax rate $of22\%$ and a marginal tax rate $of25\%$ going forward. The cost $of$ capital $(i.e.,$ discount rate$)$ for this project $is12\%.$ Develop the incremental cash flows for this replacement decision and use them $to$ calculate $NPV$ and IRR. Next, make a conclusion about whether $or$ not the existing coining press should $be$ replaced $at$ this time. Make sure that $itis$ easy $to$ determine how you arrived $at$ your incremental cash flows!