For year 1,2,3,4,5,6

Find NPV

Find IRR

complete P11-29 (similar to) EQuestion Help Integrative Investment decision Holliday Manufacturing is considering the replacement of an existing machine. The new machine costs $1.23 million and requires installation costs of $150,000. The existing machine can be sold currently for $191,000 before taxes. It is 2 years old, cost $806,000 new, and has a years of depreciation remaining. If it is held for 5 more years, the machine's market value at the end of year 5 will be $0. Over its 5-year life, the new machine shoulo reduce operating costs by $344,000 per year. The new machine wil be depreciated under MACRS using a 5-year recovery period. The new machine can be sold fo 1 $201.000 net of removal and cleanup costs at the end of 5 years. An increased investment in net working capital of $21.000 will be needed to support operations if 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 2 machine. The firm has a 9.4% cost of capital and is subject to a 40% tax rate a. Develop the relevant cash flows needed to analyze the proposed replacement. b. Determine the net present value (NPV) of the proposal. 4 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? the new machine nstallation cost nstalled cost of new asset Proceeds from sale of existing machine s l Tax on sale of existing machine Total after-tax proceeds from sale Increase in net working capital Enter any number in the edit fields and then click Check