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QUESTION $4$

$($a$)$ The ABC Company purchased a special machine$1$ year ago at a cost of $K12,000.$ At that time the machine was estimated to have a useful life of $6$ years and no salvage value. The annual cash operating cost is approximately $K20,000.$ A new machine has just come on the market which will do the same job but with an annual cash operating cost of only K$17,000.$ This new machine costs K$21,000$ and has an estimated life of $5$ years with zero salvage value. The old machine can be sold for $K10,000$ to a scrap dealer. Straight$-$line depreciation is used, and the company's income tax rate is $40$ percent.

Assuming a cost of capital of $10$ percent after taxes, what is the NPV of the new investment?

$(10$ marks$)$