Due to high demand for wood, San Lorenzo Lumber is considering buying a new timber cutting machine to add to its existing stock.

$*$ The machine will cost $$360,000$ to purchase and $$20,000$ for shipping and installation. Last year, the firm cleared an unused area in its timber mill to make space for the machine, at a cost of $$8,000.$

$*$ The new cutting machine will allow the company to sell an additional $140,000$ pieces of wood per year, at a price of $$2$ per piece. Variable costs, including timber, electricity and labor, are expected to add up to $80\%$ of sales.

$*$ To make best use of the new machine, the company will need to increase its inventory of timber$$logs by $$25,000.$ Since the firm uses trade credit when purchasing raw$$timber$,$ accounts payable will increase by $$12,000.$

$*$ The cutting machine is expected to last $4$ years and will then be sold for $$35,000.$ It falls into the $3-$year MACRS class, with depreciation rates as follows:

$$ Year $1234$

$$ Depreciation rate $33\%45\%15\%7\%$