McDonald's is considering replacing an ice cream machine. The old ice cream machine is being depreciated using the straight-line method over 10 years from a depreciable cost basis of $240,000. The old machine has 5 years of remaining usable life, and at the end its salvage value is expected to be zero, and it can be sold now for $80,000. This ice cream machine has a current book value of $120,000 The purchase price of the new ice cream machine is $500,000. The McEmployees were sent to a training course last year on how to operate the new machine, and this training cost $10,000. The new machine has a 5-year life and an expected salvage value of $50,000. There will be annual savings of electricity, labor, and materials of $80,000 per year. McDonalds is in a 40 percent tax bracket and its cost of capital is 16 percent. The MACRS depreciation method will be used and the recovery percentages for assets with a 5-year class life are given below: Year 1 2 3 4. 5 Recovery Allowance Percentage 20% 32% 19% 12% 11% 6% a) What is the initial cash outlay for the new ice cream machine? b) Determine cash flows in years 1-5. c) What is the cash flow from salvage value in year 5? d) Should the new machine be purchased? Why