4. Fantasia Company uses the machine for washing and laudry. The current machine has purchased since the four years ago. The initial cost is $300,000. The machine has the useful life 7 years since the date of purchases. The residual value is $90,000. The Current machine can generate the cash revenue per year is $200,000 and cash operating costs is $80,000 per year. If the company continues to keep or use the current machine, it will have the overhaul cost $20,000 at the end of year 6. The overhaul cost will extend the useful life of old machine from 7 years to 8 years and add the speed of machine. The residual value of year 8 is same as year 7. The overhaul cost is $20,000. After the overhaul the company can reduce the operating cost from $80,000 to $60,000 per year. At the end of year 4 of using the old machine, the company decides to purchase the new machine. The new machine's initial cost is $400,000. The new machine required the WC equals to $8,000. It will generate the cash revenue per year is $200,000 and cash operating costs is $50,000 per year. The new machine's residual value is $40,000. The new machine's use ful life is 4 years. The company uses the straight line method in calculation of depreciation. If the new machine is purchased, the current (old) machine can be sold at $150,000. Tax Rate is 30%. Cost of Capital is 10%. At the end of useful life of new machine, the recovery WC is 80% of initial WC required Required: 1.Calculate NPV to decide whether the company purchases the new machine and sold the old machine or not 2,Calculate NPV to decide whether the company purchases the new machine and keep the old machine as a reserve machine or not 4. Fantasia Company uses the machine for washing and laudry. The current machine has purchased since the four years ago. The initial cost is $300,000. The machine has the useful life 7 years since the date of purchases. The residual value is $90,000. The Current machine can generate the cash revenue per year is $200,000 and cash operating costs is $80,000 per year. If the company continues to keep or use the current machine, it will have the overhaul cost $20,000 at the end of year 6. The overhaul cost will extend the useful life of old machine from 7 years to 8 years and add the speed of machine. The residual value of year 8 is same as year 7. The overhaul cost is $20,000. After the overhaul the company can reduce the operating cost from $80,000 to $60,000 per year. At the end of year 4 of using the old machine, the company decides to purchase the new machine. The new machine's initial cost is $400,000. The new machine required the WC equals to $8,000. It will generate the cash revenue per year is $200,000 and cash operating costs is $50,000 per year. The new machine's residual value is $40,000. The new machine's use ful life is 4 years. The company uses the straight line method in calculation of depreciation. If the new machine is purchased, the current (old) machine can be sold at $150,000. Tax Rate is 30%. Cost of Capital is 10%. At the end of useful life of new machine, the recovery WC is 80% of initial WC required Required: 1.Calculate NPV to decide whether the company purchases the new machine and sold the old machine or not 2,Calculate NPV to decide whether the company purchases the new machine and keep the old machine as a reserve machine or not