Valley Radiology Group is considering replacement of an existing X-Ray machine (call it #1) with one of two newer, more efficient pieces of equipment. The existing X-Ray is 3 years old, costs $32,000 and is being depreciated using MACRS-5 year class rates. It has a remaining useful life of 5 years. There are two new X-ray machines being seriously considered. The GE X-Ray machine (call it #2) costs $40.000 plus $8,000 to install. It has a 5-year useful life. and is depreciated under the 5-vear MACRS class rates. The other new machine is HITACHI X-Ray (call it #3) that costs $54,000 to purchase and $6,000 to install, a 5-year life, and will also be depreciated under the 5-year MACRS class rates. The replacement would require $4,000 in additional working capital for GE X-Ray machine, and $6,000 for HITACHI X-Ray machine. The projected profits before deprecation and taxes with each alternative are provided in Table 1. Depreciation schedule is given in Table 2. Year Table 1: Lehigh Valley Radiology Profits Before Depreciation & Taxes E X-Ray HITACHI X-Ray $21,000 21.000 21.000 21.000 21.000 $22.000 24.000 26.000 26.000 26.000 Existing X-RAY $14.000 14.000 14.000 14.000 14.000 The existing X-Ray machine can be sold today for $18,000. After 5 years, the existing X-Ray may be sold for $1,000. GE X-Ray could be sold for $12,000, and HITACHI X- Ray could be sold for $20,000-all before taxes. The corporate tax rate is 21% for both ordinary income and capital gains. Would you recommend GE or HITACHI X-Ray machine or would you like to continue with the existing one? The required rate of return and the opportunity cost of capital is 15%. Support your recommendations with appropriate calculations and rationale. Table 2: Modified ACRS Depreciation Allowance Year 2 3year 33.33% 44.44 14.82 7 11 5year 20.00% 32.00 19.20 11.52 11.52 5.76 8 7year 14.29% 24,49 17 19 12.49 8.93 8.932 8.93 4.45