Do you also need the options for each row?

At times firms will need to declde if they want to continue to use their current equipment or replace the equipment with newer equipment. The company will need to do replacement analysis to determine which option is the best financial decision for the company, LoPasso Co. is considering replacing an exlsting piece of equipment. The project involves the following: - The new equipenent will bawe a cost of $600,000, 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. ft has a book value of. $200,000 (at year 0) and four more years of depreciation left ($50,000 per year). - The new equipment will have a salvage value of $0 at the end of the project's life (year 6 ). The old machine has a current salvage value (at year 0) of 5300,000 . - Replacing the old machine will require an investment in net operating working capital (NOWC) of $50,000 that will be recovered at the end of the project's Ife (year 6). - The new machine is more efficient, so the firm's incremental eamings before interest and taxes (EaIT) will increase by a total of 4400,000 in each of the next six years (years16), Hint: This value represants the differance between the ravenues and operating costs (inciuding depreciation expense) generated using the new equipment and that earned using the old equipment. - The project's cost of capital is 13 yei - The company's annual tax rate is 256. Complete the following table and compute the incremental cash fows associated with the replacement of the old equipment with the new equipment. Complete the following table and compute the Incremental cash flows associated with the repiacement of the oid equipment with the new equipment. The net present value (NAY) of this replacement project is: 5961,100 $720.825 Complete the following table and compute the incremental cash flows associated with the replacement of the old equigment with the new equipront. 4016,935 $1,153,320 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 analysis to determine which option is the best financial decision for the company. LoRusso Co, is considering replacing an existing piece of equipment. The project involves the following: - The new equipment will have a cost of $600,000, 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 new equipment will have a salvage value of $0 at the end of the project's life (year 6 ). The old machine has a current salvage value (at year 0 ) of $300,000. - Replacing the old machine will require an investment 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 (EBIT) will increase by a total of $400,000 in each of the next six years (years 1-6). Hint: This value represents the difference between the revenues and operating costs (including depreciation expense) 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 new equipmer Complete the following table and compute the incremental cash flows associated with the replacement of the old equipment with the new equipment. \begin{tabular}{lllll} Year 0 & Year 1 & Year 2 & Year 5 & Year 4 \\ \hline \end{tabular} 3n The net present value (NPV) of this replacement project is: $961,100$720,825$816,935$1,153,320 Complete the following table and compute the incremental cash flows associated with the replacement of the old equipment with the new equipment. cash.flow The net present value (NPV) of this replacement project is: $961,100$720,825$816,935$1,153,320