Part 11. Encircie yout final answer. 45 paints Lorene, Incy a manufacturer of dance and exercise apparel, is considering replacing an existing piece of equipment with a more sophisticated machine, In replacing the existing machine, Cash is by 555,000 . The following additional information is given. After five years, the existing machine is set to have a liquidation value of $15,000. While the proposed machine is expected to be sold at the amount of $80,000. Upon termination, Lorene still expects to recover its investment in net working capital. The firm pays 40 percent taxes on ordinary income arid capital gains. Required: 1. Compute the initial investment. 2. Compute the Operating Cash Flows of the Existing Machine for the next five years. 3. Compute the Operating Cash Flows of the Proposed Machine for the next five years. 4. Compute the Incremental Cash Flows for the next five years. 5. Compute for the Terminal Cash Flow. 6. Compure the Net Present Value using a 10% disrount rate 7. Compute the Discounted Payback Period using 10% discount rate. 8. Compute the Profitability Index. With respect to the NPV, should Lorene implement the proposal? Why? Part 11. Encircie yout final answer. 45 paints Lorene, Incy a manufacturer of dance and exercise apparel, is considering replacing an existing piece of equipment with a more sophisticated machine, In replacing the existing machine, Cash is by 555,000 . The following additional information is given. After five years, the existing machine is set to have a liquidation value of $15,000. While the proposed machine is expected to be sold at the amount of $80,000. Upon termination, Lorene still expects to recover its investment in net working capital. The firm pays 40 percent taxes on ordinary income arid capital gains. Required: 1. Compute the initial investment. 2. Compute the Operating Cash Flows of the Existing Machine for the next five years. 3. Compute the Operating Cash Flows of the Proposed Machine for the next five years. 4. Compute the Incremental Cash Flows for the next five years. 5. Compute for the Terminal Cash Flow. 6. Compure the Net Present Value using a 10% disrount rate 7. Compute the Discounted Payback Period using 10% discount rate. 8. Compute the Profitability Index. With respect to the NPV, should Lorene implement the proposal? Why