At times firms will need to decide if they want to continue to use their current equipment or replace the equipment with newer equipment. The company will need to do replacement anabsis to determine which option is the best financiat decision for the company. Price Co, is considering replecing an existing piece of equipment. The project involves the following: - The new equipment will have a cost of $1,800,000, and it is eligible for 100% bonus depreciation so it will be fully depreciated at t=0. - 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 0 ) and four more years of depreciation left ($50,000 per year). - The dew equipment wal have a salvage value of $0 at the end of the project's life (vear 6 ). The old machine has a current salvage value (at year 0 ) of $300,000 - Replacing the old machine wil require an imestment in net operating working capital (NowC) of $50,000 that will be recovered at the end of the project's life (Year 6 ). - The new machine is more efficient, so the firm's incremental earnings before interest and taxes (Com) will increase by a total of $500,000 in each of the next sox years (years 1-6). Minti This value represents the difference between the revenues and operating costs (including deprecabon expense) generated using the new equipment and that earned using the old equipment. - The project's cost of cepital is 13%. - The company's annual tox rate is 2546. Complete the following table and compute the incremental cash flows assocdated with the replacement of the old equipment with the new equipment. The net present value (NPV) of this replacement project is: $270,687 $360,916 $433,099 $415,053