URGENT ASAP.

Table on MACRS Percentage Percentage by recovery year 20% Required: a) Calculate the initial inve ment associated with replacement of the old machine by the new one. (5 marks) b) Develop the operating ca flows associated with the proposed replacement. (8 marks) c) Determine the terminal cash flow expected at the end of year 5. (5 marks) d) Determine the net present value (NPV) and Internal Rate of return () of the replacement proposal. (2 marks) IRR e) Make the recommendation to accept or reject the replacement proposal and justify your answer (2 marks) f) What is the highest cost of capital that the firm could have and still accept the proposal? Explain. (3 marks) Q1:CasaHomePro Manufacturing is a retail business of home improvement centre for all home needs striving towar Is its goal of "One Shop for All Home". The company aims to help customers improve their ome Living Lifestyle by offering value for money in great home products. The increasing demand has led CasaHomePro to consider the replacement of an existing machine. The executive officer has been assigned to look for a new machine. After few surveys were done, the best new machine cost was identified at the price of RM 2,400,000. The new machine needs to be in alled for RM300,000 and a shipping cost of RM 60,000. The present machine cane sold currently for RM370,000 before taxes. It is 2 years old, with the acquisition cost o RM 1,600,000, and has a book value of RM768,000 with a remaining useful life of 5 years. It was being depreciated under MACRS using a 5-year recovery period (as table below) and therefore has the final 4 years of depreciation remaining. If it is held for 5 more years, the machine' market value at the end of year 5 will be zero. Over its 5-year life, the new machine should reduce operating costs by RM700,000. The new machine will be depreciated under MACR, using a 5-year recovery period (as table below). The new machine can be sold for RM400,000 net of removal and clean-up cost at the end of 5 years. An increased investment in net working capital of RM50,000 will be required to support operations if the new machine is acquired. Assume that the firm has adequate operating income against which to deduct any loss experienced on the sale of the existing. The firm has an 8% cost of capital and is subject to a 25% tax rate