QUESTION 6 A company is evaluating the replacement of an old machine with a new one last year the company hired a consultant to conduct a feasibility study about this replacement project which cost them $1,000,000 at that time. The consulting fees were expensed last year The old machine was purchased 3 years ago for $4 million and was being depreciated using MACRS 5.yoar class (20%, 32% 19 2%, 11 52% 11.52% and 5 76%) The old machine can be sold for S1 million at this time the old machine is not replaced it can be sold for $500,000 four years from now The replacement machine has a cost of $3 million an estimated usolulite of 4 years This machine will be depreciated using straight line method to salvage value. The replacement machine would permitan output expansions Sales would nse by $1.5 million per year even so the new machine's much greater efficiency would cause operating expenses to decline by $350.000 per year. The new machine would require that inventones to increase by 51 milion accounts receivables to increase by $750,000 accounts payable increase by $100.000 and accrued expenses increase by $300.000 The interest expense on the debt component of the capital required for this project will be $350 000 annually. The now machine can be sold for $125.000 at the end of 4 years to another company The company's marginal federal plus state tax rate is 30% and WACC is 125 What is the CH4 (The cash flow to be used in NPV calculation) 2.307,500 1,974.500 2481 200 2.756.400 3,018,200