You are now in your second year of working as a financial analyst for HOHOHO Co and are trying to help the CEO, Nick Klaus, determine if the company should replace its existing production equipment, which is used to make toys and due to advancements in technology is headed toward obsolescence. Given the following information: Original Production Equipment New Production Equipment Initial cost when purchased $1,250,000 $2,500,000 Purchased date 3 years ago Today CCA Rate 20% 20% Salvage today $105,000 Salvage in 5 years $25,000 $155,000 Estimated annual cost savings $98,800 Useful life remaining 5 years 5 years What is your recommendation to Nick Klaus? Provide all necessary calculations. You must show your work to get full marks. Assume the following: Required return = 12%, Tax rate = 35% You are now in your second year of working as a financial analyst for HOHOHO Co and are trying to help the CEO, Nick Klaus, determine if the company should replace its existing production equipment, which is used to make toys and due to advancements in technology is headed toward obsolescence. Given the following information: Original Production Equipment New Production Equipment Initial cost when purchased $1,250,000 $2,500,000 Purchased date 3 years ago Today CCA Rate 20% 20% Salvage today $105,000 Salvage in 5 years $25,000 $155,000 Estimated annual cost savings $98,800 Useful life remaining 5 years 5 years What is your recommendation to Nick Klaus? Provide all necessary calculations. You must show your work to get full marks. Assume the following: Required return = 12%, Tax rate = 35%