1,2,&3? Required information[The following information applies to the questions displayed below.]The management of Devine Instrument Company is considering the purchase of a new drilling machine, model RoboDril1010K. According to the specifications and testing results, RoboDril will substantially increase productivity over AccuDrilX10, the machine Devine is currently using.The AccuDril was acquired 8 years ago for $120,000 and is being depreciated using the straight-line method over a 10-year expected life and an estimated salvage value of $20,000. The engineering department expects the AccuDril to keepgoing for another 3 years after a major overhaul at the end of its expected useful life. The estimated cost for the overhaulis $100,000. The overhauled machine will be depreciated using straight-line depreciation with no salvage value. Theoverhaul will improve the machine's operating efficiency approximately 20% for each of years 3, 4, and 5. No otheroperating conditions will be affected by the overhaul.RoboDril 1010K is selling for $250,000. Installing, testing, rearranging, and training will cost another $30,000. Themanufacturer is willing to take the AccuDril as a trade-in for $40,000. The RoboDril will be depreciated using the straight-line method with no salvage value. New technology most likely will make RoboDril obsolete to the firm in 5 years.encesVariable operating cost for either machine is the same: $10 per machine hour (cash-based). Other pertinent data follow:AccuDrilX10RoboDril1010KUnits of output (per year)Machine hours10,0008,00010010,0004,000100$4$Selling price per unitVariable manufacturing cost-cash-based(not including machine hours)Other annual expenses (tooling and supervising)Disposal value-todayDisposal value-in 5 years2$$55,0004040$95,000$25,000$.$50,000Devine Instrument Company's weighted-average cost of capital (WACC) is 12%, and it is in the 40% tax bracket. Use the PVfactors (Appendix C, Table 1) for calculating the NPV of each decision alternative.Required:awcation...%24 welve Homework iSavedHelpSave & ExitSubmitCheck my workRequired:1. Determine for each of years 0 though 5 (inclusive) the after-tax cash flows for items that differ between the two alternatives.2. Compute the payback period (in years) for purchasing RoboDril 1010K rather than ving AccuDril X10 overhauled in 2 years.Assume for this calculation only that all cash flows (other than those related to the ne. acquisition cost of the replacement asset)-including tax effects-occur evenly throughout the3. Using results generated in requirement 1, what is the present value of each decision alternative, keep vs. replace?year.Complete this question by entering your answers in the tabs below.Req 1 and 3Req 21. Determine for each of years 0 though 5 (inclusive) the after-tax cash flows for items that differ between the two alternatives. (Express all cash-flow amounts in thousaiindividual amounts to 1 decimal place. Negative amounts should be indicated by a minus sign.)3. Using results generated in requirement 1, what is the present value of each decision alternative, keep vs. replace? (Use the built-in NPV function in Excel to calculate picash flows in thousands (000s); round your answers to 1 decimal place. Negative amounts should be indicated by a minus sign.)After-tax Cash FlowsPV of Net CashOutflows13Overhaul AccuDrilAfter-tax cash operating cost$52.8Overhaul cost (capitalized)Tax savings on depreciation (straight-line method)Other cash expenses, after taxAfter-tax cash flowsTotal PVBuy RoboDril 1010kNet equipment purchaseAfter-tax cash operating cost< Prev4 of 4Next >%24

Required information The following information applies to the questions displayed below.] The management of Devine Instrument Company is considering the purchase of a new drilling 1010K. According to the specifications and testing results, RoboDril will substantially increase p X10, the machine Devine is currently using. The AccuDril was acquired 8 years ago for $120,000 and is being depreciated using the straig year expected life and an estimated salvage value of $20,000. The engineering department ex