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Green Moose Industries is a company that produces iwidgets, amono several other products. Suppose that Green Moose Industries considers replacing Its old machine used to

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Green Moose Industries is a company that produces iwidgets, amono several other products. Suppose that Green Moose Industries considers replacing Its old machine used to make iwidgets with a more efficient one, which would cost $1,800 and require $250 annually in operatino costs except depreciation. After-tax salvape value of the old machine is $600, while its annual operating costs except depreciation, are $1,100. Assume that, regardless of the age of the equipment, Green Moose industries's sales revenues are fixed at $3,500 and depreciation on the old machine is $600. Assume also that the tax rate is 40% and the project's risk-adjusted cost of capital, r, is the same as weighted average cost of capital (WACC) and equals 10%. Based on the data, net cash flows (NCFs) before replacement are and they are constant over four vears. Athough Green Moose Industries's NCFs before replacement are the same over the 4-year period, its NCFs after replacement vary aneually, The following table shows depreciation rates over four years. Complete the foliowing table and calculate incremental cash flows in each vear. Hint: Found your answers to the nearest dollar and remember to enter a minus sion if the calculated value is negative. Complete the following table and calculate incremental cash flows in each vear. Hint: Round your answers to the nearest dollar and remernber to enter a minus sign if the calculated value is negative. Next evaluate the incremental cash flows by calculating the net present value (NPM), the internal rate of return (IRR), and the modified IRR (MLRR). Assume again that the cost of finanding the new project is the same as the WACC and equals 10\%. Hint: Use a spreadsheet program's functions or use a financial calculator for this task. Based on the evaluabon, replacing the old equlpment appears to be a decision becaute

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