Integrative-Investment decision Holiday Manufacturing is considering the replacement of an existing machine. The new machine costs $1 21 million and requires installation costs of $110.000 The existing machine can be sold currently for $187 000 before taxes. It is 2 years old, cost $810,000 now, and has a $388 800 book value and a remaining useful for 5 years it was being depreciated under MACRS using as your recovery period and therefore has the final 4 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 6your life, the now machine should reduce operating costs by $340,000 per year. The new machine will be depreciated under MACRS using a 5-year recovery period. The new machine can be sold for $100,000 rot of removal and cleanup costs at the end of 5 years An increased investment in not working capital of $20,000 will be nooded to support operations i 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 machino, The firm has a 0.1% cost of capital and is subject to a 40% tax rate a. Develop the not cash flows needed to analyze the proposed replacement b. Determine the nel prosent value (NPV) of the proposal c. Determine the internal rate of rolum (IRR) of the proposal d. Make a recommendation to accept or reject the replacement proposal, and justly your answer e. What is the highest cost of capital that the firm could have and still accept the proposal