The John Deer Company is evaluating the replacement of one ofits machines. The machine was originally purchased ten years ago ata cost 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 John Deer doesnot replace the machine, it anticipates being able to use theexisting machine for eight more years at which time its salvagevalue would be zero. Without the purchase of the new machine, JohnDeer expects to generate revenue of $200,000 per year. The firm’suse of its existing machine is expected to generate operatingexpenses of $120,000 per year. If the new machine is purchased,Pioneer expects the firm’s annual revenues and operating costs toincrease to $270,000 and $170,000 respectively. John Deer'smarginal tax rate is 40%. To finance this project, Pioneer willraise 30% of the capital from debt and 70% of the capital fromequity; its after-tax cost of debt is 8% and the cost of equity is18%. a. Calculate the NPV for this project. b. Calculate the IRRfor this project; you should use Excel to do this. Calculate theIRR to 2 decimals; for example, 25.63%.