*Note: These amounts are used for depreciation calculations. Assume further that Mendoza is subject to a 30% income tax, both for ordinary income and gains/losses associated with disposal of machinery, and thatall cash flows occur at the end of the year, except for the initial investment. Assume that straight-linedepreciation is used for tax purposes and that any tax associated with the disposal of machinery occurs atthe same time of the related transaction. Required: Determine relevant cash flows (after-tax) at time ofpurchase of the new machine (i.e., time 0: January 1, 2019). Determine the relevant (after-tax) cash infloweach year of project operation (i.e., at the end of each of years 1 through 5). Determine the relevant (after-tax) cash inflow at the end of the project's life (i.e., at the project's disposal time, December 31, 2023).Determine the undiscounted net cash flow (after tax) for the new machine and determine whether on thisbasis the old machine should be replaced. (For all requirements, do not round intermediate calculations.round your answers to the nearest whole dollar amount.)Assume that it is January 1, 2019, and that the Mendoza Company is considering the replacement of a machine that has been used forthe past 3 years in a special project for the company. This project is expected to continue for an additional 5 years (i.e., until the end of2023). Mendoza will either keep the existing machine for another 5 years (8 years total) or replace the existing machine now with anew model that has a 5-year estimated life. Pertinent facts regarding this decision are as follows:Purchase price of machine (including transportation,setup charges, etc.)Useful life (determined at time of acquisition)Estimated salvage value, end of 2023*Expected cash operating costs, per year:Variable (per unit produced/sold)Fixed costs (total)Estimated salvage (terminal) values:January 1, 2019December 31, committed at time of acquisition of2023Net working capitalexisting machine (all fully recovered at end ofproject, December 31, 2023)Incremental net working capital required if new machineis purchased on January 1, 2019 (all fully recoveredat end of project, December 31, 2023)Expected annual volume of output/sales (in units), overthe period 2019-20231. Net cash flow (after-tax), time 0 (i.e., at purchase point)2. Net cash inflow (after-tax), during the project operation3. Net cash inflow (after-tax), at the end of the project's life5 Undiscounted net cash flow (after tax) for the new machineSkip questionKeep ExistingMachine$155,000$ 20,500Start Solving$ 0.30$ 25,5008 years$68,500$ 12.750Ć$ 30,500505,000ExitPurchase NewMachine$195,000$ 25,500*Note: These amounts are used for depreciation calculations.Assume further that Mendoza is subject to a 30% income tax, both for ordinary income and gains/losses associated with disposal ofmachinery, and that all cash flows occur at the end of the year, except for the initial investment. Assume that straight-line depreciationis used for tax purposes and that any tax associated with the disposal of machinery occurs at the same time of the related transaction.5 yearsRequired:1. Determine relevant cash flows (after-tax) at time of purchase of the new machine (i.e., time 0: January 1, 2019).2. Determine the relevant (after-tax) cash inflow each year of project operation (e., at the end of each of years 1 through 5).3. Determine the relevant (after-tax) cash inflow at the end of the project's life (.e., at the project's disposal time, December 31, 2023).5. Determine the undiscounted net cash flow (after tax) for the new machine and determine whether on this basis the old machineshould be replaced.(For all requirements, do not round intermediate calculations. round your answers to the nearest whole dollar amount.)$ 0.24$ 24,500$ 23,000$ 10,500505,000should be purchased

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