Problem $9-13$ Project Evaluation $($LO$2)$

PC Shopping Network may upgrade its modem pool It last upgraded $2$ years ago, when it spent $$75$ million on equipment with an assumed life of $5$ years and an assumed salvage value of $$10$ million for tax purposes. The firm uses stralght$-$line depreclation. The old will be depreclated to zero using straight$-$line depreclation. The new equipment will enable the firm to increase sales by $$36$ million per year and decrease operating costs by $$18$ million per year. At the end of $3$ years, the new equipment will be worthless. Assume the firm's tax rate is $30\%$ and the discount rate for projects of this sort is $10\%.$

Requlred:

a$.$ What is the net cash flow at time $0$ if the old equipment is replaced?

Note: Negatlve amounts should be Indicated by a minus sign. Do not round Intermedlate calculatlons. Enter your answer In millions rounded to $2$ decimal places.

b$.$ What are the incremental cash flows in years: $($I$)1$; $($II$)2$; $($III$)3?$

Note: Do not round Intermedlate calculations. Enter your answer In millions rounded to $2$ decimal places.

c$.$ What is the NPV of the replacement project?

Note: Do not round Intermedlate calculations. Enter the NPV In millions rounded to $2$ decimal places.

d$.$ What Is the IRR of the replacement project?

Note: Do not round Intermedlate calculations. Enter the IRR as a percent rounded to $2$ decimal places.

$\backslash$table$[[$a$.$ Net cash flow,$$,(84\mathrm{.}35),$million$],[$b$.$ Incremental cash flow,$$,(45\mathrm{.}33),$million per year$],[$c$.$ NPV$,$$$,(197\mathrm{.}03),$million$],[$d$.$ IRR,,$(3\mathrm{.}20),\%$H