The Everly Equipment Company's flange-lipping machine was purchased 5 years ago for $55,000. It had an expected life of 10 years when it was bought and its remaining depreciation is $5,500 per year for each year of its remaining life. As older flange-lippers are robust and useful machines, this one can be sold for $20,0000 at the end of its useful lfie.

A new high-efficiency, digital-controlled flange-lipper can be purchased for $120,000., including installation costs. During its 5-year life, it will reduce cash operating expenses by $30,000 per year, although it will not affect sales. At the end of its useful life, the high-efficiency machine is estimated to be worthless. MACRS depreciation will be used, adn the machine will be depreciated over its 3 -year class. 33.33%, 44.45%, 14,81%, and 7.41%. The old machine can be sold today for $35,000. The firm's tax rate is 35% and the appropriate cost of capital is 16%

B. What are the incremental net cash flows that will occur at the end of years 1 through 5?

C. What is the NPV of this project, should eerly replace the flange-lipper?