Assume that Kelly is a nonprofit organization and is considering to change an old graphite machine to a new carbon-fiber machine. Kelly's carbon-fiber machine project to change old machine to new machine is 5 year cash generating project. Data and assumptions are as follows. Purchase price Current book value Current disposal value Terminal disposal value for five years from now Annual depreciation Working capital Graphite Machine. (old) $40,000 6,500 0 8,000 6.000 Carbon fiber Machine (new) $390,000 0 78,000 15,000 T=1,2,3,4 130,000 Working capital is deemed to be recovered at the end of investment Striaght line depreciation is applicable The expected additional operating cash inflows(except working capital) Tax effects of cash inflows and outflows occur at the same time that the cash inflows and outflows occur Required rate of return Income tax rate Below is a table for the present value of $1 at compound interest. Year 8% 1 .926 .857 2 3 .794 .735 .681 2345 4 5 6% .943 .890 .840 8% 40% .792 .747 10% .909 .826 .751 T=5 121,000 .683 .621 12% .893 .797 .712 .636 .567 Q1) Compute the net present value of the new carbon fiber machine without tax Q2) Compute the net present value of the new carbon fiber machine with tax