The Bgbee bottling Compeny is contemplating the repiacement of one of its boetiing mschines with a newer and more efficient one, The old machine was purchased prior to the TuA, has a book value of $650,000, and a remaining usefil hife of 5 years. The firm does not expect to realize any return frum scrapging the old machine in 5 years, but it can seil its now to another firm in the industry for $265,000. The old machine is being depreciated by $130,000 per year, using the stralght-line method. The new machine has a purchase price of $1,200,000, an estimated useful ife of 5 vears, and an estimated salvage value of $120,000. The new machinn is eligitie for 1003 bonus depreciadion at the time of purchase. It is expected to economize on electric power usage, lsbor, and repair costs, as well as to reduce the number of defective boulea. In total, an annual savingt before taxes of 1225,000 will be realiged if the new machine is instaled. The company's marginal tax rate is 25%, and it has a 12% WAce. a. What initial cash outlay is required for the new machine after bonus depreciation is considered? Cash outhow should be indicated by a minus sign, Round your answer to the nearest dollar 3 b. Calculate the change in the arnual depreciation expense if the replacement is made. Negative change values, if any, should be indicated by a minus sign, Round your answers to the nearest dolar. 6. What ore the incrementar cash fows in Years 1 through 57 Round your answeis to the nearest dollar. Year 1 1 Year 2 1 Year 3 3 Year 4 13 Year 5 3 d. Sbould the firm purchase the new machine? e. In genaral, now wouid each of the foliowing tactors affect the inyestment decisign, and how should each be treated? 1. The expected life of the existing machine decreases. The new machine will fook than before duet to the relative of the cash flows attribiatie to it, 2. The WaCe is not canstant, but is increaeing as Eigbee adds more projects into its capital budget for the year. The NPV will due to a capital cost