The firm is considering replacing an old machine. The machine has 5 years of depreciation in the amount of $10,000 per year remaining (leftover BV = $50,000). The old machine can be sold today for $175,000. It could be used for 5 more years and would have had $0 book value left at the end of 5 years. A new machine (to perform the same task) will cost $2,000,000, an additional $150,000 to be delivered and installed, and will cause an increase in NOWC of $125,000 that will recovered at the end of machine's useful life. The new machine has an estimated life of 5 years, and will be depreciated with the straight line method for 5 years. At the end and of 5 years, the new machine can be sold for $250,000. The new machine is also more efficient than the old one, and will save the firm $2,000,000 each year. The firm is in the 40% tax bracket, and its WACC is 12%. Should the machine be replaced? a) What is the initial cash outflow? Do not forget ATSV_old) b) What is the depreciation for each year of the project? (it is the same) c) What is the incremental cash flow (OCF) for years 1 through 4? (it is the same) d) What is the terminal cash flow of the project, i.e. CF_2? (ATSV_new, reverse Delta NOWC, and OCF) What is the net present value of the project? Do you Accept/Reject? Why