CAPITAL BUDGETING WITH INCOME TAXES Montreal Paper Company must purchase a paper sorter to replace its existing one on January 1, 2022. This is an essential investment because manual sorting is too demanding and causes physical problems for employees. Two models that would adequately meet the company's needs are the Price and Allen models. Information related to each model includes: Price Allen Cost of machines 53,800 $ 107,600 Working Capital needed to to to 20,000 to 25,000 Salvage value 10,000 Life - years Annual savings of operating costs S 24,000 $ 40,000 CCA 30 Income Tax rate 25% After-tax Cost of capital 12% Required: A| Compute the after-tax net present value, internal rate of return, payback periods and profitability index for both models using the total-cost approach. Price Allen YEAR Annual Net Cash YEAR Annual Net Flow Cash Flow 1-1-22 1-1-22 12-31-22 12-31-22 12-31-23 12-31-23 12-31-24 12-31-24 12-31-25 12-31-25 12-31-26 12-31-26 12-31-27 12-31-27 12-31-28 12-31-28 12-31-29 12-31-29 12-31-29 12-31-29 CCA SCHEDULE CCA SCHEDULE YEAR OPEN ADD'N -50% BASIS CCA CCA END YEAR OPEN ADD'N -50% BASIS CCA CCA END UCC RATE UCC UCC RATE UCC 2022 2022 2023 2023 2024 2024 2025 2025 2026 2026 2027 2027 2028 2028 2029 2029CALCULATE CASH FLOW AFTER TAX (CFAT) CALCULATE CASH FLOW AFTER TAX (CFAT) YEAR CFAT Payback YEAR CFAT Payback 1-1-22 1-1-22 12-31-22 12-31-22 12-31-23 12-31-23 12-31-24 12-31-24 12-31-25 12-31-25 12-31-26 12-31-26 12-31-27 12-31-27 12-31-28 12-31-28 12-31-29 12-31-29 12-31-29 12-31-29 Net Present Value Net Present Value Internal Rate of Return Internal Rate of Return Payback year Payback year Profitability Index Profitability Index B) Which investment would you recommend? C| Explain why have you made this recommendation