A Firm Is Considering an Investment of $480,000 in New

A firm is considering an investment of $480,000 in new equipment to replace old equipment with a book value of $95,000 and a market value of $63,000.If the firm replaces the old equipment with new equipment, it expects to save $120,000 in operating costs the first year.The amount of savings will grow at a rate of 8% per year for each of the following five years.Both pieces of equipment belong to asset class 8, which has a CCA rate of 20%.The salvage values of both the old equipment and the new equipment at the end of six years are $11,000 and $78,000, respectively.There are other assets in the asset class when the project terminates and the half-year rule applies in the first year.In addition, replacement of the old equipment with the new equipment requires an immediate increase in net working capital of $50,000.The firm's marginal tax rate is 35% and cost of capital is 11%.
a)What is the initial after-tax cash flow?
b)What is the present value of the incremental CCA tax savings?
c)What is the present value of the incremental after-tax operating cash flows?
d)What is the present value of the incremental ending after-tax cash flow?
e)What is the NPV of the replacement project?