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Please enter the following information below into the ICAR format Excel Cash Flow Estimation Worksheet.

$1.$ The equipment has a delivery cost of $$115,000.$ An additional $$3,000$ is required to install

and test the new system.

$2.$ The new pumping system is classified by the IRS as $7-$year property with the same $7-$year

estimated service life. For assets classified by the IRS as $7-$year property, the Modified

Accelerated Cost Recovery System $($MACRS$)$ permits the company to depreciate the

asset over $8$ years at the following rates: Year $1=14\%$; Year $2=25\%$; Year $3=17\%$;

Year $4=13\%$; Year $5=9\%$; Year $6=9\%$; Year $7=9\%$; Year $8=4\%.$ At the end of its

$4$ estimated service life of $7$ years, the salvage value is expected to be $$8,000,$ with removal

costs of $$1,200.$

$3.$ The existing pumping system was purchased at $$48,000$ five years ago and has been

depreciated on a straight$-$line basis over its economic life of $6$ years. If the existing system

is removed from the well and created for pickup, it can be sold for $$4,200$ before tax. It will

cost $$1,000$ to remove the system and create it$.$

$4.$ At the time of replacement $($t$=0),$ the firm will need to increase its net working capital

requirements by $$6,500$ to support inventories.

$5.$ The new pumping system offers lower maintenance costs and frees personnel who would

otherwise have to monitor the system. In addition, it reduces product wastage because of

a higher cooling efficiency. In total, it is estimated that the yearly savings will amount to

$$32,000$ if the new pumping system is used.

$6.$ FPC$\text{'}$s assets are financed by debt and common equity and has a target debt ratio of $30$

percent. Its debt carries an interest rate of $6$ percent. The firm has paid $$2\mathrm{.}00$ of dividend

per share this year $($D$0)$ and expects a constant dividend growth rate of $5$ percent per year

in the coming years. The firm's current stock price, P$0,$ is $$28\mathrm{.}00.$ The firm uses its overall

weighted average cost of capital in evaluating average risk projects, and the replacement

project is perceived to be of average risk.

$7.$ The firm's federal$-$plus$-$state tax rate is $25$ percent, and this rate is projected to remain

fairly constant into the future.