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(Related to Checkpoint 12.2) (Replacement project cash flows) Madrano's Wholetale Frut Corpany located in Mchlen, Texes is considering the purchase of a new Seet of trastors bo be used in the delivery of fruits and vogotables grown in the Rio Grande Valley of Teras. if goes through with the purchase, it will spond $360,000 on eight tigs. The new trucks wit be kept for 5 years, during which time they will be depreciated teward a $36,000 savage value using straight-lind deprecluton. The rigs are txpected to have a market value in 5 years equal to their satiage velut. the new tractors will be used to replace the company's older foet of oight trucks which are fuly depceciated but can be sold foc an esfiraled $16,000 (oecsuse the tractors have a current book value of zero, the seling price is fuly taxable at the fimm's 27 percent tax rate). The existing tractor fieet is expected to be useable for 5 more years after which time they will have no salvage value. The existing fleet of tractors uses $205,000 por yoar in diotel fuel, whereas the new, more efficient fieet will use only $110,000. th oddson, the now fipet will be covered under aramant, so the maintenance costs per year are expected to be only $13,000 compared to $31,000 for the existing floet. a. What are the diferentlal operseing cash flow savings pee year during years 1 through 5 for the new feot? b. What is the initial ceth cutlay requred so replace the ealiting feet with the newer tractors? c. What does the Emethe for the replacement project cash flows for yoars o through 5 look like? d. If Madrane requires a discount rate of 13 peccent for newe levestmoras, sheuld the feet be replaced? 3. The diferential operating cash fow savings per year during years 1 through 4 for the new heet are 1 (Round io the neareat dollue) (Rou

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