Question No. 2: (9 Marks)

ABC Company is considering the replacement of two old machines with a new, more efcient machine. It has determined that the relevant after-tax incremental operating cash ows of this replacement proposal are as follows:

END OF YEAR
Cash ows	0	1	2	3	4	5	6	7	8
	$404,424	-$86,890	$106,474	$91,612,	$84,801	$84,801	$75,400	$66,000	$92,400

Calculate projects payback period, net present value, and protability index using a discount rate in percentage terms equal to sum of last two digits of your system ID. Is the project acceptable?

[ last 2 digit of my system id is 54]