KFUPM is planning to replace it heavy duty printing machine with a newer model that is faster and better quality. The existing machine has a life of $5$ years and $2$ years of them has passed. Now KFUPM is evaluating replacing this machine with the newer model which has a life of $3$ years. KFUPM hired you to analyze the proposed replacement and you collected the below information.

New$$ Machine:

Life of$$ machine: $3$ years

The cost of the new machine is SAR $1$ comma $086$

The machine will increase the gross profit every year by SAR $334$

The market value of the machine when sold at the end of its life is SAR $192$

If$$ replaced, then the net working capital$($NOWC$)$ will increase every year by SAR $23$

KFUPM will recover all investments in working capital at the end of the new$$ machine's life$($after $3$ years$).$

Old$$ Machine:

Life of machine is $5$ years. $2$ years has past. Effective remaining life of the machine is $3$ years.

Orginal cost of the existing machine is SAR $877$

Total depreciation of the past $2$ years is SAR$350\mathrm{.}8$

If KFUPM decided to go with the replacement$$ proposal, then the existing machine can be sold right now at SAR $212$

The market value of the machine when sold at the end of its life is zero$(3$ years from$$ today$)$

WACC is $9\mathrm{.}13\%$

Tax rate is$40\%$

Both machines use$$ straight$-$line Depreciation.

Calculate the$$ follwoing:

Question content area bottom

Part $1$

$$Notes:

$1.$ Use $2$ Decimals

$2.$ It is advisable to solve the question using Excel or on$$ paper, and then put your relevant answers$$ here:

Depreciable base SAR is

$$

$1086$

A$1.$ New$$ Machine:

Year$0$

Year$1$

Year$2$

Year$3$

NOPAT$+$ Dep.

$$

$345\mathrm{.}2$

$$

$345\mathrm{.}2$

$$

$345\mathrm{.}2$

A$2.$ Cash Flows from Working Captial$($WC$)$:

Year$0$

Year$1$

Year$2$

Year$3$

$(-)$ change in NOWC$*$

$$

negative $23$

$0$

$0$

$$

$23$

$*$make sure to put the correct sign

A$3.$ Cash Flows from the Initial Outlay$($IO$)$:

Year$0$

x

x

x

$(-)$ IO$*$

$$

negative $1086$

x

x

x

$*$make sure to put the correct sign

A$4.$ Cash Flows from Terminal Cash Flows$($TCF$)$:

x

x

x

Year$3$

TCF$*$

x

x

x

$$

$115\mathrm{.}2$

$*$make sure to put the correct sign

A$5.$ Free Cash Flows for New Machine$($FCF$\_$new$)$:

Year$0$

Year$1$

Year$2$

Year$3$

$$FCF$\_$new$*$

$$

negative $1109$

$$

$345\mathrm{.}2$

$$

$345\mathrm{.}2$

$$

$483\mathrm{.}4$

$*$The sum of$$ A$1-$A$4$

B$1.$ Existing$$ Machine:

Year$0$

Year$1$

Year$2$

Year$3$

NOPAT$+$ Dep.

x

$$

enter your response here

$$

enter your response here

$$

enter your response here

B$2.$ Cash Flows from Working Captial$($WC$)$:

Year$0$

Year$1$

Year$2$

Year$3$

$(-)$ change in NOWC$*$

$$

enter your response here

$$

enter your response here

$$

enter your response here

$$

enter your response here

$*$make sure to put the correct sign

B$3.$ Cash Flows from the Initial Outlay$($IO$)$:

Year$0$

x

x

x

$(-)$ IO$*$

$$

enter your response here

x

x

x

$*$make sure to put the correct sign

B$4.$ Cash Flows from Terminal Cash Flows$($TCF$)$:

x

x

x

Year$3$

TCF$*$

x

x

x

$$

enter your response here

$*$make sure to put the correct sign

B$5.$ Free Cash Flows for Existing Machine$($FCF$\_$Old$)$:

Year$0$

Year$1$

Year$2$

Year$3$

$$FCF$\_$Old$*$

x

$$

enter your response here

$$

enter your response here

$$

enter your response here

$*$The sum of$$ B$1-$B$4$

C$.$ Relevant$$ CF:

Year$0$

Year$1$

Year$2$

Year$3$

Relevant FCF

$$

enter your response here

$$

enter your response here

$$

enter your response here

$$

enter your response here

D$.$ NPV$=$