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21-34 Equipment revival, no proceeds taxes. Dublin Chips is a manufacturer of prototype bits domiciled inDublin, Ireland. Next year, in 2018, Dublin Chips expects to concede 615 prototype bits at an middle worth of$95,000. Dublin Chips' marketing sin chairman forecasts augmentation of 65 prototype bits per year through 2024.That is, ask-for conquer be 615 in 2018, 680 in 2019, 745 in 2020, and so on.The stock cannot yield over than 585 prototype bits per-annum. To engage coming ask-for, Dublin Chipsmust either modernize the stock or restore it. The old equipment is amply depreciated and can be sold for$4.200,000 if the stock is restored. If the stock is modernized, the costs to modernize it are to be excellentized anddepreciated aggravate the suited activity of the updated stock. The old equipment is retained as bisect of the modernizealternative. The forthcoming basis on the two options are available:ModernizeReplaceInitial bombardment in 2018$35,300,000$66,300,000Terminal arrangement treasure in 2024$ 7,500,000$16,000,000Useful activity7 years7 yearsTotal annual currency bounteous costs per prototype bit$78,500$66,000Dublin Chips uses straight-line diminution, assuming nothing ultimate arrangement treasure. For artlessness, we assumeno substitute in worths or costs in coming years. The bombardment conquer be made at the commencement of 2018, and alltransactions thereafter appear on the conclusive day of the year. Dublin Chips' required rate of retaliate is 14%.There is no contrariety betwixt the modernize and restore alternatives in conditions of required launched excellent.Dublin Chips has a extraordinary noncompetitor on proceeds taxes until 2024.Required:1. Sketch the currency inflows and outflows of the modernize and restore alternatives aggravate the 2018-2024 age.2. Calculate the payback age for the modernize and restore alternatives.3. Calculate net introduce treasure of the modernize and restore alternatives.4. What factors should Dublin Chips meditate in choosing betwixt the alternatives?

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