Al times fm will need to decide if they want to continue to use the current quipement or replace the equipment with new equipment. The compatiy will need to do replacement analysis to determine which option is the best fuancial decision for the company Lausas Co. is considering replacing an existing piece of equipment. The project involves the following: - The new equipment will have a cost of $1,200,000, and it is digible for 100% bonui depreciation sa a mil be fully depreciated at - The old machine was purchased before the new tax law, so it is being depreciated on a straight-line basis. It has a book value of $200,000 (at year) and four more years of depreciation (550,000 per year) . The main equipment will have a salage value of $0 at the end of the project's life (year 6). The old machine has a current salvage value (at year of $300,000 beplacing the old machine will require an investment in net operating working capital (NOWC) of $50,000 that will be recovered at the and of the project's life (6). The new machine is more efficient, so the firm's incremental earnings before interest and taxas (EBIT) will increase by a total of 5400,000 in each of the next six years (years 1-5). Hint: This value represents the difference between the revenues and operating COSES including depreciation expanse) generated using the new equipment and that earned using the old equipment . The project's cost of capital is 13% . The company's annual tax rate is 25% Complete the following table and compute the incremental cash flows associated with the replacement of the old equipment with the equipment Year 1 Year 2 Year 3 Year 4 Years investment EBIT Depreciation XT + Salvage valu - Tax Salvage - NOW + Recapture of NOWC Total from cash flow Then print value (NPV) of this replacement project is O 5434,435 O $511,100 O $82,765