Please use excel file to answer this questions and provide explanations if possible.

ABC Shopping Network Capltal Budgeting Analysis. Following a feasibility study that cost ABC Shopping Network $1.5m to examine the need for a new modern pool, the firm may upgrade its modem pool. ABC last upgraded the pool 2 years ago, when it spent 5115 million on equipment with an assumed life of 5 years. It was also assumed that the fully depreciated equipment would have a salvage value of 515 million after 5 years for tax purposes (the firm uses straight-line depreciation). At this time, the old equipment can be sold for s80 million A new modem pool can be installed today for 5150 million, will have a 3- year life, and will be depreciated to zero using straight-line depreciation. The new equipment will enable the firm to increase sales by $25 million per year and decrease operating costs by $10 million per year. Interest costs for the equipment are projected to be $500,000 annually. At the end of 3 years, the new equipment will be worthless. Assume the tax rate is 35 percent and the discount rate (WACC) for the projects of this sort is 12 percent. Perform an analysis that will enable you to answer the following questions. 1. What is net cash flow at time for initial outlay) If the old equipment is replaced? 2. What are the incremental cash flows in Years 1, 2, and 37 3. What are the NPV, IRR and MIRR of the replacement project? Should the new pool be installed? 4. Suppose the Chief Engineer insists that, the pool can be optimally used for 4 years and the Chief Financial Officer suggests that the firm can and should use a 3 year MARCS (see Appendix 12A of your text). What would the NPV IRR and MIRR under the changed circumstances assuming that the cash flow benefits continue and nothing else changes? Will the new pool be accepted under these new circumstances