The Everly Equipment Company's flange-lipping machine waspurchased 5 years ago for $80,000. It had an expected life of 10years when it was bought and its remaining depreciation is $8,000per year for each year of its remaining life. As olderflange-lippers are robust and useful machines, this one can be soldfor $20,000 at the end of its useful life.

A new high-efficiency digital-controlled flange-lipper can bepurchased for $140,000, including installation costs. During its5-year life, it will reduce cash operating expenses by $50,000 peryear, although it will not affect sales. At the end of its usefullife, the high-efficiency machine is estimated to be worthless.MACRS depreciation will be used, and the machine will bedepreciated over its 3-year class life rather than its 5-yeareconomic life, so the applicable depreciation rates are 33.33%,44.45%, 14.81%, and 7.41%.

The old machine can be sold today for $55,000. The firm's taxrate is 35%, and the appropriate cost of capital is 16%.

1. If the new flange-lipper is purchased, what is the amount ofthe initial cash flow at Year 0? Round your answer to the nearestwhole dollar.
   $
2. 
   
3. 
   
4. 
   
5. What are the incremental net cash flows that will occur at theend of Years 1 through 5? Do not round intermediate calculations.Round your answers to the nearest whole dollar.

   CF1	$
   CF2	$
   CF3	$
   CF4	$
   CF5	$

6. 
   
7. What is the NPV of this project? Do not round intermediatecalculations. Round your answer to the nearest whole dollar.