ABC Corporation is determining the cash flows for a project involving replacement of an old machine by a new machine. The existing machine has a book value of Rs. 20,000 and a salvage value of Rs. 30,000. It can be used for 5 more years at the end of which its salvage value is nil. The new machine cost Rs. 80,000. It is expected to bring an annual saving of Rs. 30,000 in operating cost. The depreciation rate on both the machines will be 25% on the written down value method. The new machine will fetch a salvage value of Rs. 50,000 after 5 years. The tax rate for the firm is 40%. Estimate the cash flow associated with the replacement project. (6M) b. What is the NPV of the replacement project when cost of capital is 12%? (2M) a