Consider the case of dones Company: The managers of Jones Company are considering replacing an existing piece of equipment, and have cellected the following informatien: - The new piece of equipment will have a cost of $1,200,000, and it will be depreciated on a straight-line basis over a period of five years. - The old machine is also being depreciated on a straight-line basis, It has a book value of 5200,000 (at year 0 ) and three more years of depreciation left ( $50,000 per vear). - The new equipment will have a salvage value of 50 at the end of the project's life (year 5 ), The old machine has a current salvage value (at year 0 ) of $300,000. - Replacing the old machine will require an investment in net working capital (NWC) of $30,000 that will be recovered at the end of the project's life (year 5). - The new machine is more efficient, so the incremental increase in operating inceme before taxces will increase by a total of $700,000 in each of the nest five years (vears 1-5). (Hint: This value represents the difference between the revenues and oparating cests (including depreciation expense) generated using the new equipment and that earned using the old equipment.) - The projest's recuired rate of return is 11%. - The company's annual tax rate is 40%. Complete the following table and compute the incremental cash flows associated with the replacement of the old equipment with the new equipment. The net present value (NPV) of this replacement project is