Star Rise constructions is considering whether to replace an existing riveting machine with a new model. The new machine is expected to increase earnings before depreciation from $300,000 to $900,000 per year for the next 8-years. The existing machine was purchased 2-years ago with a useful life of 10-years at a cost of $480,000. The existing machine can be sold now to another company for $330,000. Other details relating to the new machine are listed in the table below: Cost of the new riveting machine $750,000 plus an additional $60,000 for installation costs. Initial increase in working capital. $25,000, expect to fully recover This amount will be recovered at at the end of the eight-year the end of year 8 period. Estimated Salvage Value $160,000 Estimated disposal and clean-up $60,000 costs Estimated Useful Life 8 Years Depreciation Method Cost of the new machine will be fully depreciated down to zero using the straight-line method over its estimated useful life. The business is subject to a 30% tax rate and the cost of capital for the investment in the new machine is 10%. You are required to answer the following questions: i. Calculate the initial outlay for replacing the existing machine with the new machine. (3 marks) ii. Calculate the incremental on-going free cash flows relating to the replacement. (4 marks) iii. Calculate the terminal cash flows relating to the new machine. (3 marks) iv. Estimate the NPV of this investment. Should Star Rise Constructions proceed with the purchase of the new machine?(2 marks) v. Discuss four (4) guiding principles by which financial managers should assess the advantages and disadvantages of the various capital-budgeting criteria. (4 marks) vi. If depreciation is not a cash-flow expense, does it affect the level of cash flows from a project in any way? (2 marks)