Q Search Ch 12: End-of-Chapter Problems - Cash Flow Estimation and Risk Analysis 0 x REPLACEMENT ANALYSIS The Bigbee Botting Company is contemplating the replacement of one of its betting machines with a newer and more efficient. The machine has bok 5625,000 and a remaining useful life of 5 years. The firm does not expect to read any return from scrapping the old machine 3 years, but now to wrote tiem the industry for $235,000. The old machine is being depreciated by $125,000 per year, wong the straight line method The new machine has a purchase price of $1,200,000, an estimated useful it and MACRS classite of 5 years, and an estimated svage of 5150,000The cable depreciation rates are 20%, 32%, 19%, 129, 11%, and 6%. It is expected to economie on electric power usage, labor, and repair cools, as well as to reduce the nuront of defective bottles. In total, an annual savings of $225,000 will be realized in the new machine stated. The company's marginal tax rates 39 and has a 12% WACC. 3. What initial cash outlay is required for the new machine? Round your answer to the nearest dollar. Negative amount should be indicated by a minun son b. Calculate the annual depreciation allowances for both machines and compute the change in the annual apreciation experteit the relaciteit in mate. Moune you answers to the nearest dollar Year Depreciation Depreciation Change in Allowance, Allowance, Old Depreciation New 1 $ 2 3 4 S What are the incremental net cash flows in Years 1 through 57 Round your answers to the nearest doar Year 1 Year 2 Year 3 Year 4 Years d. Should the firm purchase the new machine? Select