A company which John started 10 years ago is considering buying a new machine which is more efficient than the old one and will increase the annual revenue from $70,000 to $85,000. The annual operating cost will also be reduced from $40,000 to $20,000. This new machine costs $190,000 and shipping and installation charges is an additional $10,000. It has 10 years of economic life, and a salvage value of $25,000 at the end of 10 years. The company uses straight line depreciation and it has a marginal tax rate of 40%. The old machine, on the other hand, is still working well (although its book value = $0), and if not replaced, is expected to last another 10 years (with no salvage value at the end of 10 years). The old machine has a current market value of $40,000. Assume a weighted average cost of capital of 10%. (a) Calculate the Cash Flow for Year 0 for analyzing this asset replacement project. (3 marks) (b ) Calculate the net present value (NPV) of this asset replacement project. (7 marks)