by excel

Holliday Manufacturing is considering the replacement of an existing machine. The new machine costs 51.25 million and requires installation costs of $143.000. The existing machine can be sold currently for $187.000 before taxes. It is 2 years old, cost $809.000 new, and a remaining useful life of years. It was being deprecated under MACRS using a 5-year recovery period and therefore has the final 4 years of depreciation remaining if it is held for more you the machine's market value at the end of years will be 50. Over its 5-year life, the new machine should reduce operating costs by $357.000 per year. The new machine will be depreciated under MACRS Using a 5-year recovery period. The new machine can be sold for 5191.000 net of removal and deanup costs at the end of years. An increased investment in working capital of 530,000 will be needed to support operations in the new machine is acquired. Assume that the firm has adequate operating income against which to deduct any loss experienced on the sale of the existing machine. The firm has a 9.5% cost of capital and is subject to a 40% tax rate. a. Develop the net cash flows needed to analyze the proposed replacement b. Determine the net present value (NPV) of the proposal. c. Determine the internal rate of return (IRR) of the proposal d. Make a recommendation to accept or reject the replacement proposal, and justify your answer e. What is the highest cost of capital that the firm could have and still accept the proposal? Calculate the initial investment (Round to the nearest dollar