The DC company is a computer chip manufacturer based in France. By 2024, it expects to produce and ship 615 of those prototypes (chips) at an average price of $95,000. In addition, it predicts that it will increase annual production and sales by 65 additional chips each year until 2030; That is, the demand will be 615 in 2018, 680 in 2025, 745 in 2026, and so on. In the current physical plant, DC cannot produce more than 585 chips annually. Therefore, it is considering two alternatives to satisfy future demand: 1) or modernize the current manufacturing plant, or 2) replace it with a new one. The equipment used in this production is fully depreciated, but can be sold for $4,200,000, should the existing physical plant be replaced. On the other hand, if the physical plant is modernized, the costs of doing so can be capitalized and depreciated over the useful life of the modernized plant. The previous equipment (that used in that operation) would be retained in the case of modernization. The data related to the two alternatives are the following: Update Replace Initial investment in 2024 $35,300,000 Disposal value in 2030 (terminal value) 7,500,000 Annual operational costs per prototype 78,500 Useful life 7 years $66,300,000 16,000,000 66,000 7 years DC uses straight-line depreciation, with no residual value. Assume that there are no changes or fluctuations in prices in the future, and that the investment is made at the beginning of 2024, and the other transactions at the end of each year. On the other hand, the required rate of return on DC is 14%, there is no tax impact, and the use of working capital is not required in any of the alternatives. 1. Calculate and demonstrate what the annual cash flows (inflows and outflows) associated with this investment will be between 2024-2030. 2. Calculate and demonstrate the recovery period in the case of each of the alternatives. 3. Calculate and demonstrate the net present value in the case of each of the alternatives. 4. Explain what factors DC must take into consideration when evaluating the alternatives using the methods in 2) and 3). Assume the same data, but now, if the contributory effect is considered, and a rate of 35%. This rate also applies to the gain or loss on the sale of the equipment (when applicable). 5. Calculate and demonstrate what the annual cash flows (inflows and outflows) associated with this investment will be between 2024-2030, in this case. 6. Calculate and demonstrate the net present value in the case of each of the alternatives in this case.