You recently began working for Orange Fizz Company. Company management is contemplating the replacement of its three-year old bottling machines that originally cost $ 1, 200.000 with newer and more efficient ones. The old machines were placed on the MACRS five-year class life depreciation schedule three years ago. Total operating costs for the old bottling machines are $550,000 per year and Orange Fizz will bottle 12 million bottles per year each year for the next seven years. The firm expects to realize a $50,000 return from salvaging the old machines in 7 years, but they may be sold now to another firm in the industry for $200,000. It retained, the old machines would be operational for the next 7-years. The new machines, if purchased, would cost $1,300,000 and would be placed on a MACRS five-year class life depreciation but will be kept in operation for the next 7 years. The machines would have an estimated salvage value of $185,000 in seven years. Total annual savings in operating costs of $285,000 will be realized if the machines are installed. The company is in the 40% tax bracket, and it has a 10% cost of capital. Should the replacement be made? Use a relative (incremental) cash flow analysis similar to what we did in class and in your text and determine the NPV and IRR for the project