Pro$-$Sports, a sports equipment manufacturer, has a machine currently in use that was originally purchased two years ago for $$80,000.$ The firm is depreciating the machine on a straight$-$line basis using a five$-$year recovery period. The present machine will last for the next five years or$,$ once removal and clean$-$up costs are taken into consideration, it could be sold now for $$50,000.$ Pro$-$Sports can buy a new machine today for a net price of $$120,000($including all installation costs$).$ The proposed machine will be depreciated using a five$-$year straight$-$line depreciation period. If the firm acquires the new machine, there will be no change in its investment in net working capital. Profit before depreciation and taxes $($PBDT$)$ is expected to be $$90,000$ for each of next five years for the present machine, and $$110,000$ for each of next five years for the proposed machine. The corporate tax rate for the firm is $28\%.$ Pro$-$Sports expects to be able to sell the proposed machine at the end of its five$-$year usable life for $$20,000($after paying removal and clean$-$up costs$).$ Alternatively, the present machine is expected to net $$5,000$ on its sale at the end of the same period. Required: A$.$ Calculate the initial investment associated with the replacement decision. $[2$ marks$]$ B$.$ Calculate the incremental operating cash flows associated with the proposed replacement decision. $[4$ marks$]$ C$.$ Calculate the terminal cash flow associated with the proposed replacement decision. $[2$ marks$]$ D$.$ Assuming Pro$-$Sports has a WACC of $15\%,$ please make a recommendation to the management as to whether or not the old machine should be replaced. Show all calculations to support your recommendation.