Q.1 Asia Textile Milis Limited is comsidering repiacing an existint piece of machinery with a more sophisticated machine. The old machine was purchased 2 yeam ago at a cost of $60,000, and this ameunt was being depreciated under MACRS using a Syear recovery periad. The marhine las 5 years of usable life remainieg. The new inarhaine that is being comaidered cost $86,000 and requires 54,000 in installiation costs. The aew machine would be depreciated under MACRS ining a 5 year recovery period. To support the increased business resulting from purchase of the new machine, accounts receivable would increase by 56.000, imventories by $4.000, and accounts payable by 55.000. The firm can currently sell the old machine for $35,000 without incurring any removal or cleanup costs. The firm is subject to a tax rate of 40%. The revenues and expentes (exciuting depreciation and interest) associated with the new and the ald inachine for the nest 5 years are given in the tuble below. At the ead of 5 years, the existing gochine would have a marlet value of zero; the aew machina would be sold to aet $15,000 after removal and cleanup costs and before taxes. You requirtd to compute intial invesunent, operating cash flows, incremtiental after tox cash inflows anal terminal cash flows of the project. Plectse depict all rash flow on a time line. Marles: 12.50 Q.1 Asia Textile Milis Limited is comsidering repiacing an existint piece of machinery with a more sophisticated machine. The old machine was purchased 2 yeam ago at a cost of $60,000, and this ameunt was being depreciated under MACRS using a Syear recovery periad. The marhine las 5 years of usable life remainieg. The new inarhaine that is being comaidered cost $86,000 and requires 54,000 in installiation costs. The aew machine would be depreciated under MACRS ining a 5 year recovery period. To support the increased business resulting from purchase of the new machine, accounts receivable would increase by 56.000, imventories by $4.000, and accounts payable by 55.000. The firm can currently sell the old machine for $35,000 without incurring any removal or cleanup costs. The firm is subject to a tax rate of 40%. The revenues and expentes (exciuting depreciation and interest) associated with the new and the ald inachine for the nest 5 years are given in the tuble below. At the ead of 5 years, the existing gochine would have a marlet value of zero; the aew machina would be sold to aet $15,000 after removal and cleanup costs and before taxes. You requirtd to compute intial invesunent, operating cash flows, incremtiental after tox cash inflows anal terminal cash flows of the project. Plectse depict all rash flow on a time line. Marles: 12.50