Homework for Chapter 12: Problem #2 in the text (Chapter 12) NOTE: PLEASE USE THE ATTACHED EXCEL FILE TITLED Homework for Chapter 12_Excel" TO SOLVE THE FOLLOWING PROBLEM. Tough Steel, Inc. is a processor of stainless steel products. The firm is considering replacing an old stainless steel tube-making machine for a more cost-effective machine that can meet the firm's quality standards. The old machine was acquired 2 years ago at an installed cost of $500,000. It has been depreciated under the MACRS's 5-year recovery period, and has a remaining economie life of 5 years. It can be sold today for $350.000 before taxes, but if the firm decides to keep it, it can be sold for $100,000 before taxes at the end of year 5. The first option is Machine A, which can be purchased for $600,000, but will require S30,000 in installation costs. This machine would be depreciated under the MACRS's 3- year recovery period. At the end of its economic life, the machine will have a salvage value of $350,000 before taxes. This machine would require an investment in net working capital of $100,000. The second option is Machine B, which can be purchased for S550,000, but requires $20,000 in installation costs. This machine would be depreciated under the MACRS's 5- year recovery period. At the end of its economic life, the machine would have a salvage value of $330.000 before taxes. This machine requires no investment in net working capital. The firm has estimated the following EBIT for all three machines: | EBIT Year Old machine Machine A Machine B I $90,000 $90,000 $120.000 2 $90,000 $10,000 $20,000 3 $120.000 $150,000 $120.000 4 S150.000 S230,000 $200,000 5 $150.000 $270,000 $200,000 The firm's WACC is 14% and its tax rate is 40%. a) Calculate the following cash flows for the old machine, machine A. and machine B: . initial investment, annual after-tax cash flows for each year, and the terminal cash flow. b) Determine which machine is more profitable for the company based on the payback period, discounted payback period, net present value, profitability index, internal rate of return, and modified internal rate of return