QUESTION 26 Replacement Project A Firm is considering the Replacement of the Existing Equipment. The Firm's Marginal Tax Rate is 40%. - The Old Equipment was purchased two years ago at a cost of $120M with an expected useful life of 6 depreciated on a Straight Basis and can be sold today for $80M. If not replaced, the Equipment W End of its Useful Life . The Old Equipment is have a Salvage Value of $30M at the - The New Squipment costs $450M, requires an additional cost of $50M for Shipping and Installation, has an Estimated Life of 4 Years and a Salvage Valbe of $150M, The Equipment falls into MACRS 5-Year Class and will increase Revenues by $120M Per Year, while Reducing Operating costs by S4OM Por Your, The New Equipment requires an increase in NWC of $10M at Yoar 0. 5-Year MACRS: Year 1: 20%, Year 2: 32%, Year 3: 19%, Year 4:12%, Year 5: 11% Year 6:6% What is the Cash Flow at Year 47 $218M $192M $202M $212M