Robotics Corporation is considering replacing an existing hoist with a new hoist N. The existing hoist is 3 old, cost $32,000, and it has 2 years left of operations. It is depreciated under a straight-line depreciation over 5 years recovery period. Hoist N costs $54,000 to purchase and $6000 to install. It has 2 years usable and will be depreciated under a straight-line depreciation method using 2 years recovery period. Supposet purchase of hoist N would result in a $6,000 increase in net working capital. The projected profits before depreciation and taxes with hoist N and the existing hoist are given in Table 1. The existing hoist can curre be sold for $20,000 and will not incur any removal or other costs. At the end of 2 years, the existing hoist ca sold to net $12,625 before taxes. Hoists N can be sold at $44,000 before taxes at the end of the 2-year peric The firm is subject to a 40% tax rate on both ordinary income and capital gain. The company can raise fund finance the initial investment via 50% debt and 50% equity. The company's current bond is traded at a price B=800. It has a face value F=1000 and a coupon rate c=10%. The bond's maturity is 5 years. The company's current stock is traded at a price P=100. Its expected dividends is D. =10 and dividends are expected to grow constant rate g=16.4%. Evaluate whether the company should replace its old machine by the new one using net present value method; that is, find the initial investment, the change in operating cash flow, terminal cas flow, the weighted average cost of capital, and use all that to compute the NPV and make a decision. Keep on decimal place in the WACC calculations. Profits before depreciation and taxes Year Hoist N Existing hoist 1 22,000 14,000 2 24,000 14,000 Robotics Corporation is considering replacing an existing hoist with a new hoist N. The existing hoist is 3 old, cost $32,000, and it has 2 years left of operations. It is depreciated under a straight-line depreciation over 5 years recovery period. Hoist N costs $54,000 to purchase and $6000 to install. It has 2 years usable and will be depreciated under a straight-line depreciation method using 2 years recovery period. Supposet purchase of hoist N would result in a $6,000 increase in net working capital. The projected profits before depreciation and taxes with hoist N and the existing hoist are given in Table 1. The existing hoist can curre be sold for $20,000 and will not incur any removal or other costs. At the end of 2 years, the existing hoist ca sold to net $12,625 before taxes. Hoists N can be sold at $44,000 before taxes at the end of the 2-year peric The firm is subject to a 40% tax rate on both ordinary income and capital gain. The company can raise fund finance the initial investment via 50% debt and 50% equity. The company's current bond is traded at a price B=800. It has a face value F=1000 and a coupon rate c=10%. The bond's maturity is 5 years. The company's current stock is traded at a price P=100. Its expected dividends is D. =10 and dividends are expected to grow constant rate g=16.4%. Evaluate whether the company should replace its old machine by the new one using net present value method; that is, find the initial investment, the change in operating cash flow, terminal cas flow, the weighted average cost of capital, and use all that to compute the NPV and make a decision. Keep on decimal place in the WACC calculations. Profits before depreciation and taxes Year Hoist N Existing hoist 1 22,000 14,000 2 24,000 14,000