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 Assume a situation in which a company has an existing asset A that has a current net book value foriginal cost less accumulated depreciation to date) of $300,000

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 Assume a situation in which a company has an existing asset A that has a current net book value foriginal cost less accumulated depreciation to date) of $300,000. This asset has a useful life of additional years to estimated disposal (sales) value both today and at the end of 3 years is zero Asset which would replace A could be purchased today for $600.000. If purchased, would generate annual casts operating cost savings (pretax) of $280,000 for each year or its 3 year useful life in determining depreciation deductions for tax purposes, assume the straight line method and xero salvage value for both assets The company is subject to a combined federal, state, and local income tax of 40% both for operating income and gains fosses related to the sale of assets Other than the initial outlay for asset Bassume that all cash flows and related tax payments occur at the end of the year Assume a weighted- average cost of capital of 10% (Use Table and Table 2) (Do not round Intermediate calculations) Required: Determine the relevant te, differential cash flows after tax at each of the following three points related to this asset-replacement decision (1) project initiation (ie, time ). (2) project operation (e. end of years 1, 2 and 3) and (3) project disposal termination (le, end of ) a. What is the estimated net present value of the decision to replace et A the existing asset) with asset er? Use the built in NPV function in Excel. (Round your final answer to nearest whole dollar amount.) 3 What is the weighted average cost of capital (WACC) that would make the company indifferent between keeping or replacing asset A? Use the Goal Seek option in Excel to answer this question (Round your final answer to 2 decimal places.) Answer is complete but not entirely correct. 1 $ S Cash flow (after tax) at project initiation (e.time) Cash flow (ather tax) during the project operation ( end of years 1 2 and 3) Cash flow (atter tax) at project disposal termination (end of year 3) Estimated net prosent value Weighted average cost of capital 480.000 200.000 37088 37 265 1436 2 S