Next evaluate the incremental cash flows by calculating the net present value $($NPV$),$ the internal rate of return $($IRR$),$ and the modified IRR $($MIRR$).$

Assume again that the cost of financing the new project is the same as the WACC and equals $10\%.$ Hint: Use a spreadsheet program's functions or

use a financial calculator for this task.

NPV

IRR

MIRR

Evaluation

the IRR is positive

the IRR is higher than WACC

the MIRR is positive

Based on the evaluation, replacing the old equipment appears to be a

decision because