$(8$ points$)$ Patterson Inc. is considering the replacement of an old machine.

The old machine, which was purchased $5$ years ago, has book value of $$63,000$ today and an

expected useful life of four years. The firm could sell it for $$60,000$ today or $$10,000$ in four years.

The new machine costs $$280,000.$ It has a useful life of four years and a salvage value of $$18,000.$

Both machines fall into asset class $39,$ which has a CCA rate of $25\%.$

The new machine will increase sales by $$85,000,$$$90,000,$$$80,000,$ and $$70,000$ in years $1,2,3,$

and $4$ respectively. The firm must invest $$5,000$ in NWC today, and then NWC must be maintained

at $10\%$ of sales revenue. The discount rate is $8\%$ and the tax rate is $40\%.$

a$.$ What is the $PV$ of the CCA tax shields? $(3$ points$)$

b$.$ What is the NPV of the above project excluding CCA tax shields? $(3$ points$)$

c$.$ What is the NPV of the above project? Should Patterson Inc. implement the above project? $(2$

points$)$