(Related to Checkpoint 12.2) (Replacement project cash flows) Madrano's Wholesale Fruit Company located in McAllen, Texas is considering the purchase of a new fleet of tractors to be used in the delivery of fruits and vegetables grown in the Rio Grande Valley of Texas if it goes through with the purchase, it will spend 5440,000 on eight rigs The new trucks will be kept for 5 years, during which time they will be depreciated toward a 537,000 salvage vakre using straight line depreciation. The rigs are expected to have a market value in 5 years equal to their salvage value. The new tractors will be used to replace the company's older fleet of eight trucks which are fully depreciated but can be sold for an estimated $22.000 (because the tractors have a current book value of zero, the selling price is fully taxable at the firm's 26 percent tax rate). The existing tractor fleet is expected to be useable for 5 more years after which time they will have no salvage value. The existing fleet of tractors uses 5210,000 per year in diesel fuel, whereas the new, more efficient fleet will use only $130,000. In addition, the new fleet will be covered under warranty, so the maintenance costs per year are expected to be only 514,000 compared to $31,000 for the existing fleet a. What are the differential operating cash flow savings per year during years 1 through 5 for the new fleet? b. What is the initial cash outlay required to replace the existing fleet with the newer tractors? c. What does the timeline for the replacement project cash flows for years 0 through 5 look like? d. If Madrano requires a discount rate of 14 percent for new investments, should the feet be replaced? a. The differential operating cash flow savings per year during years 1 through 4 for the new fleet are $ (Round to the nearest dollar) The terminal cash flow of the new fieet is $(Round to the nearest dollar) b. The initial cash outlay required to replace the existing fleet with the newer tractors is $(Round to the nearest dollar) c. is the timeline below an accurate representation of the replacement project cash flows for years through 5? (Select from the drop-down menu.) Time Period 0 2 3 4 5 Years Cash Flow - $423 720 592 736 $92,736 $92,736 $92,736 $129736 d. Assuming Madrano requires a discount rate of 14% for new investments, the fleet (Select the best choice below.) OA should be purchased because the NPV is $86 133 making it a worthwhile investment for the company OB should not be purchased because the NPV is - 386,133 making it an unacceptable investment for the company