supercomputers by using the most efficient way. Gulf United i in the 40% tax bracket and cost of capital of 10%. The conditions of the upgrade the original version or replace with the new version for bigdata facilities and supercomputers are as follows: Upgrade the original version: - Initial cost of old big data = $ 150,000 - Annual depreciation of $ 15,000 - The old big data facilities were purchased 5 years ago - The current book value of old bigdata = $ 75,000 - The salvage value of old bigdata (today) = $ 95,000 - The salvage value in 5 years = $ 20,000 Replace with the new version: - Initial cost of new bigdata = $ 250,000 - Its anticipated to have 5 years life - The salvage value in 5 years = $ 0 - Cost savings per year = $ 75,000 per year - The company will use 3-years MACRS depreciation. TABLE 1 MACRS Half Your Convention Year Depreciation Rate for Recewwey Period to 2000 1 100 300 18.00 1920 *** 33 SOR so 20 Year 370 7219 14 7.41 TO 22 2 2 21 50 50 61 5.13 20 4 4523 4.463 55 so 11 5.50 46 44 4461 5.00 14 15 16 591 4.40 4. 14 19 1833 4403 440 220 8. Calculate the total cash flow (or cash flow from assets CFFA) from Yr.O - Yr.5 (2 marks) h. Calculate the NPV and IRR (you may use financial calculator) (2 marks) i. What is your advice to Gulf United? Should they replace bigdata with the new version? (1 mark) j. Explain the concept of incremental cash flows and stand-alone principle! (2 marks)