AUTO WASH PROBLENI 1. THE AUTO WASH COMPANY HAS JUST INSTALLED A SPECIAL MACHINE FOR WASHING CARS. THE MACHINE COSTS $20,000. ITS OPERATING COSTS, BASED ON A YEARLY VOLUME OF 100.000 CARS, TOTALS $15,000, EXCLUSIVE OF DEPRECIATION. THE MACHINE WILL HAVE A FOUR-YEAR USEFUL LIFE AND NO RESIDUAL VALUE. 2. DURING THE FIRST DAY IN USE, A MACHINE SALESMAN OFFERS A DIFFERENT MACHINE THAT PROMISES TO DO THE SAME JOB AT A YEARLY OPERATING COST OF $9,000, EXCLUSIVE OF DEPRECIATION, THE NEW MACHINE WILL COST $24,000 CASII INSTALLED. THE "OLD" MACHINE IS UNIQUE AND CAN BE SOLD OUTRIGHT FOR ONLY $10,000, LESS $2,000 REMOVAL COST. THE NEW MACHINE, LIKE THE OLD ONE, WILL HAVE A FOUR-YEAR USEFUL LIFE AND NO RESIDUAL VALUE. 3. SALES, ALL IN CASII, WILL BE $150,000 PER YEAR AND OTHER CASH EXPENSES WILL BE $110,000 ANNUALLY REGARDLESS OF TIIIS DECISION. 4. THE TAX RATE IS 40% AND BOTH MACHINES WILL BE DEPRECIATED ON THE MACRS BASIS AND HAVE 3-YEAR RECOVERY PERIODS. ASSUME CERTAINTY AND A MARKET. INTEREST RATE OF 6% ON ALL MATURITIES. 5. SHOULD THE NEW MACHINE BE PURCHASED