Q1: The Arabic corporation is considering the purchase of a new machine to replace the current equipment. The new machine costs $75,000 and requires $5,000 in installation costs. It will be depreciated under MACRS using a 5-year recovery period. The old machine was purchased 4 years ago for an installed cost of $50,000; it was being depreciated under MACRS using a 5-year recovery period. The old machine can be sold today for $55,000 net of any removal or cleanup costs. As a result of the proposed replacement, the firm's investment in net working capital is expected to increase by $15,000. The firm pays taxes at a rate of 40%. Depreciation Percentages by Recovery Year Using MACRS: 1 2 3 4 5 5 years 20% 32% 19% 12% 12% 5% 6 A. Calculate the book value of the old machine. 3 marks B. Determine the taxes, if any, attributable to the sale of the old machine. 3 marks