Integrative: Investment decision Holiday Manufactiring is considering the replacement of an existing machine. The new machine costs $1.29 milion and requires instalation casts of $152,000. The existing machine can be sold currently for $189,000 before taxes, It is 2 years old, cost $762,000 now, and has a $300,160 book valje and a remaining usafa life of 5 years. It was beng dopreciatod under MACRS using a 5 -year recovery peciod and therelore has the final 4 years of depreciation remaining if it is held for 5 moce years, the machine i market vive at the end of year 5 will be \$0. Over its 5-year ile, the new machine should reduce operating costs by $352,000 per year. The new machine wif be depreciated under MACF: 5 using a 5 -year recovery penicd. The new machine can be sold for $190,000 net of removal and cleanup costs at be end of five years. An increased investment in net working captal of $29, 000 wil be needed to support operations it the new machine is acquired. Assume that the fimm has adequate operabing income ajainat which to deduct any loss expenenced on the sale of the exsting machine. The fem has a 9.2% cost of capitai and is subject to a 40% tax rale. a. Develop the nat cash flows needed to analyze the proposed replacement. b. Determine the net present value (NPV) of the proposal. c. Determine the insernal fate of retum (IRR) of the proposal d. Make a recommendation to accept or reject the replacement proposal, and Justify your answer. Calculate the operating cash flows from the new machine: (Round to the nearest dollar.) Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes -These percentages have been rounded to ine nearest wrioie perceri it smpiny vaivulainto numv retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year convention. Calculate the tertinal cash flow: (Round to the nearest dollar.) b. Determine the net present value (NPV) of the proposat. The netpresent value is 5 (Round to the neareat dollar.) c. Determine the interral rate of return (IRR) of the proposal The internal rate of retum is: \%, (Round to one decimal place.) Integrative: Investment decision Holiday Manufactiring is considering the replacement of an existing machine. The new machine costs $1.29 milion and requires instalation casts of $152,000. The existing machine can be sold currently for $189,000 before taxes, It is 2 years old, cost $762,000 now, and has a $300,160 book valje and a remaining usafa life of 5 years. It was beng dopreciatod under MACRS using a 5 -year recovery peciod and therelore has the final 4 years of depreciation remaining if it is held for 5 moce years, the machine i market vive at the end of year 5 will be \$0. Over its 5-year ile, the new machine should reduce operating costs by $352,000 per year. The new machine wif be depreciated under MACF: 5 using a 5 -year recovery penicd. The new machine can be sold for $190,000 net of removal and cleanup costs at be end of five years. An increased investment in net working captal of $29, 000 wil be needed to support operations it the new machine is acquired. Assume that the fimm has adequate operabing income ajainat which to deduct any loss expenenced on the sale of the exsting machine. The fem has a 9.2% cost of capitai and is subject to a 40% tax rale. a. Develop the nat cash flows needed to analyze the proposed replacement. b. Determine the net present value (NPV) of the proposal. c. Determine the insernal fate of retum (IRR) of the proposal d. Make a recommendation to accept or reject the replacement proposal, and Justify your answer. Calculate the operating cash flows from the new machine: (Round to the nearest dollar.) Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes -These percentages have been rounded to ine nearest wrioie perceri it smpiny vaivulainto numv retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year convention. Calculate the tertinal cash flow: (Round to the nearest dollar.) b. Determine the net present value (NPV) of the proposat. The netpresent value is 5 (Round to the neareat dollar.) c. Determine the interral rate of return (IRR) of the proposal The internal rate of retum is: \%, (Round to one decimal place.)