The Sleeping Beauty Knitting Company (SBKC) plans to replace one of its knitting machines with a newer and more efficient model. The old knitting machine was bought 4 years ago for $750,000, and the company paid an additional $20,000 for installation and insurance. The company has been depreciating this machine to a value of 0 using the straight-line depreciation method over 8 years. However, the old knitting machine can still be used for 6 more years in the production process and SBKC expects to sell this old machine for $60,000 6 years from today. However, if the company decides to replace the old machine now, it can sell the old machine to another firm in the industry for $440,000. The new machine has a purchase price of $1,200,000. The company will depreciate this new machine to a value of 0 using the straight-line method over 8 years as well. SBKC can also use this new machine for six years in its production process. The SBKC expects that this new machine will have a resale value of $180,000 after six years. This new machine is expected to decrease electricity, labor, 2 and repair costs, and the number of defective fabrics produced. Because of all these reductions, annual cost savings of $230,000 per year will be realized in years 1 through 3 if the new machine is purchased to replace the old one. The annual cost savings will decrease to $210,000 per year for years 4 through 6. Furthermore, because of the lower breakage of the new machine, the company can reduce the inventory it carries by $25,000 at time 0 and keep it at that level for the duration of this project. The companys tax rate is 35% and the required rate of return on projects like this is 14%. a. Calculate the operating cash flows for years 1 through 6. b. Calculate the net capital spending at times 0 and 6. c. Calculate the change in net working capital from year 0 to 6. d. Decide if SBKC should replace the old machine with the new one and state why.