Easy$-$Chair Corp. is considering replacing its existing equipment that is used to produce comfort recline chairs. This existing equipment was purchase $2$ years ago at a base price of $$100,000.$ Installation costs at the time for this old equipment were $$5,000.$ The existing equipment is considered a $5-$year class for MACRS. The existing equipment can be sold today for $$40,000$ and for $$0$ in $5$ years. The new equipment has a purchase price of $$200,000$ and is also considered a $5-$year class for MACRS. Installation costs for the new equipment are $$10,000.$ It is estimated that this equipment can be sold in $5$ years $($end of project$)$ for $$70,000.$ This new equipment is more efficient than the existing one and thus savings before taxes using the new machine are $$20,000$ a year. This new equipment will also require additional working capital today of $$12,000$; this investment will be recovered at the end of the project in year $5.$ The company's marginal tax rate is $20\%$ and the cost of capital is $10\%.$

What is the NPV of this replacement project? The following $6$ questions reach the value for the answer.

MACRS Fixed Annual Expense Percentages by Recovery Class

Year $3-$Year $5-$Year $7-$Year $10-$Year $15-$Year

$133\mathrm{.}33\%20\mathrm{.}00\%14\mathrm{.}29\%10\mathrm{.}00\%5\mathrm{.}00\%$

$244\mathrm{.}45\%32\mathrm{.}00\%24\mathrm{.}49\%18\mathrm{.}00\%9\mathrm{.}50\%$

$314\mathrm{.}81\%19\mathrm{.}20\%17\mathrm{.}49\%14\mathrm{.}40\%8\mathrm{.}55\%$

$47\mathrm{.}41\%11\mathrm{.}52\%12\mathrm{.}49\%11\mathrm{.}52\%7\mathrm{.}70\%$

$511\mathrm{.}52\%8\mathrm{.}93\%9\mathrm{.}22\%6\mathrm{.}93\%$

$65\mathrm{.}76\%8\mathrm{.}93\%7\mathrm{.}37\%6\mathrm{.}23\%$

$78\mathrm{.}93\%6\mathrm{.}55\%5\mathrm{.}90\%$

$84\mathrm{.}45\%6\mathrm{.}55\%5\mathrm{.}90\%$

$96\mathrm{.}56\%5\mathrm{.}91\%$

$106\mathrm{.}55\%5\mathrm{.}90\%$

$113\mathrm{.}28\%5\mathrm{.}91\%$

$125\mathrm{.}90\%$

$135\mathrm{.}91\%$

$145\mathrm{.}90\%$

$155\mathrm{.}91\%$

$162\mathrm{.}95\%$

For your answer, round to the nearest dollar, do not enter the $ sign, use commas to separate thousands, use a negative sign in front of first number is the cash flow is negative $($do not use parenthesis to indicate negative cash flows$).$ For example, if your answer is $$3,005\mathrm{.}87$ then enter $3,006$; if your answer is $-$$$1,200\mathrm{.}25$ then enter $-1,200$

$1.$ What is the initial outlay $($I$0)$ for this project $-$ the project cash flows at time $=0?$

$2.$ What is the free cash flow $($FCF$)$ for year $1$ of this replacement project?

$3.$ What is the free cash flow $($FCF$)$ for year $2$ of this replacement project?

$4.$ What is the net operating profit plus incremental depreciation for year $5$ of this replacement project?

$5.$ What is the free cash flow $($FCF$)$ for year $5$ of this replacement project?

$6.$ What is the NPV of this replacement project?