Question: Please help.. The new equipment will have a salvage value of SO at the end of the project's life (year 6). The old machine has

 Please help.. The new equipment will have a salvage value of

Please help..

The new equipment will have a salvage value of SO at the end of the project's life (year 6). The old machine has a current salvage value (at year 0) of S300,000. Replacing the old machine will require an investment in net working capital (NWC) of 530,000 that will be recovered at the end of the project's life (year 6). The new machine is more efficient, so the firm's incremental earnings before interest and taxes (EBIT) will increase by a total of S500,000 in each of the next six years (years 1-6). The project's cost of capital is 13%. The company's annual tax rate is 35%. Complete the following table and compute the incremental cash flows associated with the replacement of the old equipment with the new equipment

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