The Computer company is evaluating the replacement of one of itsmachines. The machine was originally purchased ten years ago at acost of $35,000 and has been depreciated to a book value of zero.If Pioneer replaces the machine, it will be able to bid on largerprojects that require the capabilities of the new machine. The newmachine will cost the firm $80,000, which will be depreciated over4 years according to the following depreciation rates: 40% in eachof years 1 and 2, and 10% in each of years 3 and 4. The new machinequalifies for an immediate 2% investment tax credit. Pioneeranticipates that at the end of the machine’s eight year economiclife it will be sold for $10,000. Pioneer estimates that itsexisting machine can be sold today for $5,000. If Pioneer does notreplace the machine, it anticipates being able to use the existingmachine for eight more years at which time its salvage value wouldbe zero. Without the purchase of the new machine, Pioneer expectsto generate revenue of $200,000 per year. The firm’s use of itsexisting machine is expected to generate operating expenses of$120,000 per year. If the new machine is purchased, Pioneer expectsthe firm’s annual revenues and operating costs to increase to$270,000 and $170,000 respectively. Pioneer’s marginal tax rate is40%. To finance this project, Pioneer will raise 30% of the capitalfrom debt and 70% of the capital from equity; its after-tax cost ofdebt is 8% and the cost of equity is 18%. a. Calculate the NPV forthis project. b. Calculate the IRR for this project; you should useExcel to do this. Calculate the IRR to 2 decimals; for example,25.63%.