Macon Company is considering a newassembly line to replace the existing assembly line. The existingassembly line was installed 2 years ago at a cost of $90,000; itwas being depreciated under the straight-line method. The existingassembly line is expected to have a usable life of 4 more years.The new assembly line costs $120,000; requires $8,000 ininstallation costs and $5,000 in training fees; it has a 4-yearusable life and would be depreciated under the straight-linemethod. The new assembly line will increase output and therebyraises sales by $10,000 per year and will reduce productionexpenses by $5,000 per year. The existing assembly line cancurrently be sold for $15,000. To support the increased businessresulting from installation of the new assembly line, accountspayable would increase by $5,000 and accounts receivable by$12,000. At the end of 4 years, the existing assembly line isexpected to have a market value of $4,000; the new assembly linewould be sold to net $15,000 before taxes. Finally, to install thenew assembly line, the firm would have to borrow $80,000 at 10%interest from its local bank, resulting in additional interestpayments of $8,000 per year. The firm pays 21% taxes and itsshareholders require 10% return.

(A)    (6 points) Whatis the initial cash outlay for this replacement project?

(B)    (5 points) Whatis the operating cash flow of the project?

(C)    (5 points) Whatis the terminal cash flow of th

(D)    (4 points)Should you replace the existing assembly line? Provide all thedetails.