13-19, with comprehensive answer step-by-step please

most tractors do give 5 years that some last for as long as 8 years. Given this discussion, the CFO asks you to prepare a scenario anal- ysis to determine the importance of the tractor's life on the NPV. Use a 40% marginal federal-plus-state tax rate, a zero salvage value, and a 10% WACC. Assuming each of the indicated lives has the same probability of occurring (probability = 1/3), what is the tractor's expected NPV? (Hint: Use the 5-year straight-line depreciation for all analyses, and ignore the MACRS half-year convention for this problem.) 13-19 NEW PROJECT ANALYSIS Holmes Manufacturing is considering a new machine that costs $250,000 and would reduce pretax manufacturing costs by $90,000 annually. Holmes would use the 3-year MACRS method to depreciate the machine, and management thinks the machine would have a value of $23,000 at the end of its 5-year operating life. The applicable depreciation rates are 33%, 45%, 15%, and 7%, as discussed in Appendix 122. Net operating working capital would increase by $25,000 initially , but it would be recovered at the end of the project's 5-year life. Holmes's marginal tax rate is 40%, and a 10% WACC is appropriate for the project. a. Calculate the project's NPV, IRR, MIRR, and payback. b. Assume management is unsure about the $90,000 cost savingsthis figure could deviate by as much as plus or minus 20%. What would the NPV be under each of these situations? c. Suppose the CFO wants you to do a scenario analysis with different values for the cost savings, the machine's salvage value, and the net operating working capital (NOWC) requirement. She asks you to use the following probabilities and values in the scenario analysis: Scenario Probability Cost Savings Salvage Value NOWC 0.35 $72,000 $18,000 $30,000 0.35 90,000 23,000 25,000 0.30 108,000 28,000 20,000 Worst case Best case Best case Calculate the project's expected NPV, its standard deviation, and its coef- ficient of variation. Would you recommend that the project be accepted? Why or why not? 13-20 REPLACEMENT ANALYSIS The Erley Equipment Company purchased a machine 5 years ago at