Assume that Juneidi Company is considering the purchase of a newer, more efficient yogurt-making machine. If purchased, it would require the new machine on January 2, year 1. Juneidi expects to sell 600,000 gallons of yogurt in each of the next five years at a $2 per gallon selling price. Juneidi has two options: (1) continue to operate the old machine purchased four years ago or (2) sell it and purchase the new machine. The following information has been prepared to help decide which option is more desirable. Old Machine New Machine Original cost of machine at acquisition S 1,600,000 2,000,000 Useful life from date of acquisition 17 years 5 years Expected annual cash operating expenses: 120 Variable cost per gallon $1.00 Total fixed cash costs $ 400,000 $ 160,000 Depreciation is as follows: Tax Age of Equip (years) Depreciation Rate 1 S 2125% 31209 20 20% Estimated cash value of machines follows:Old Machine New Machine January 2, Year 1 S 400,000 $2,000,000 December 31, Year 3 S200,000 $1,000,000 Juneidi is subject to a 40% income tax rate on all income. Assume that tax depreciation is calculated without regard to salvage value. Use an after-tax discount rate of 10%