. Pro-Sports, a sports equipment manufacturer, has a machinecurrently in use that was originally purchased two years ago for$80,000. The firm is depreciating the machine on a straight-linebasis using a five-year recovery period. The present machine willlast for the next five years or, once removal and clean-up costsare taken into consideration, it could be sold now for $50,000.Pro-Sports can buy a new machine today for a net price of $120,000(including all installation costs). The proposed machine will bedepreciated using a five-year straight-line depreciation period. Ifthe firm acquires the new machine, there will be no change in itsinvestment in net working capital. Profit before depreciation andtaxes (PBDT) is expected to be $90,000 for each of next five yearsfor the present machine, and $110,000 for each of next five yearsfor the proposed machine. The corporate tax rate for the firm is28%. Pro-Sports expects to be able to sell the proposed machine atthe end of its five-year usable life for $20,000 (after payingremoval and clean-up costs). Alternatively, the present machine isexpected to net $5,000 on its sale at the end of the same period.Required: A. Calculate the initial investment associated with thereplacement decision. [2 marks] B. Calculate the incrementaloperating cash flows associated with the proposed replacementdecision. [4 marks] C. Calculate the terminal cash flow associatedwith the proposed replacement decision. [2 marks] D. AssumingPro-Sports has a WACC of 15%, please make a recommendation to themanagement as to whether or not the old machine should be replaced.Show all calculations to support your recommendation.