Clinton Truck Corp. is evaluating whether it should replace a 10-year old equipment. Because this is a replacement type of project, you set out to estimate relevant cash flows assuming the replacement decision is made. What cash flows do you think are valid and relevant in the initial period, i.e. period 0?

I. Purchase cost of a new machine alone II. Sales price of the old machine alone III. Potential cost savings from using the new machine IV. After-tax salvage value from selling the old machine

Group of answer choices

I and IV

II and III

I and II

I and III