REPLACEMENT ANALYSIS The Bigbee Botting Company is contemplating the replacement of one of its botting machines with a newer and more efficient one. The old machine has a book value of $550.000 anda remaining useful life of 5 years. The firm does not expect to realize any return from scrapping the old machine in 5 years, but it can set it now to another form in the industry for $255.000 The old machine is being depreciated by $110.000 per year, using the straight-line method The new machine has a purchase price of $1.200.000, an estimated seule and MACRS date of 5 years, and an estimated salvege value of $160,000. The applicable depreciation rates are 20%, 32, 194, 124, 115 and 64. It is expected to economice on electric power usage labor and costs, as well as to reduce the number of defective bottles. In total, an annual savings of $210,000 will be readed it the new machine is installed. The company's marginal tax rate is 35%, and it has a 12%. WACC What initial cash outlay is required for the new machine Round your answer to the nearest dollar Negative amount should be indicated by a minus b. Calculate the annual depreciation allowances for both machines and compute the change in the annual depreciation expense the replacement is made and your nearest dollar Year Depreciation Depreciation change in Allowance, Allowance, Old Depreciation swers to the What are the incremental net cash flows in Years I through 5 Round your answers to the nearest de Year 3 Year Years d. Should the firm purchase the new machine? c. What are the incremental net cash flows in Years 1 through 5? Round your answers to the nearest dollar. Year 3 Year 5 Year 1 Year 2 Year 4 d. Should the firm purchase the new machine? -Select- Support your answer. The input in the box below will not be graded, but may be reviewed and considered by your instructor e. In general, how would each of the following factors affect the investment decision, and how should each be treated? 1. The expected life of the existing machine decreases The input in the box below will not be graded, but may be reviewed and considered by your instructor 2. The WACC is not constant, but is increasing as Bigbee adds more projects into its capital budget for the year. The input in the box below will not be graded, but may be reviewed and considered by your instructor