Rockyford Company must replace some machinery that has zero book value and a current market value of $$1,200.$ One possibility is to invest in new machinery costing $$45,000.$ This new machinery would produce estimated annual pretax cash operating savings of $$18,000.$ Assume the new machine will have a useful life of $4$ years and depreciation of $$11,250$ each year for book and tax purposes. It will have no salvage value at the end of $4$ years. The investment in this new machinery would require an additional $$2,100$ investment of net working capital. $($Assume that when the old machine was purchased, the incremental net working capital required at the time was $$0.)$

If Rockyford accepts this investment proposal, the disposal of the old machinery and the investment in the new one will occur on December $31$ of this year. The cash flows from the investment are expected to occur over a four$-$year period.

Rockyford is subject to a $40\%$ income tax rate for all ordinary income and capital gains and has a $8\%$ weighted$-$average after$-$tax cost of capital. All operating and tax cash flows are assumed to occur at year$-$end. $($For Parts $2$ and $3,$ use the relevant table from Appendix C$$Table $1$ or Table $2.)$

Required:

$1.$ Determine the after$-$tax cash flow arising from disposing of the old machinery.

$2.$ Determine the present value of the after$-$tax cash flows for the next $4-$years. Round your answer to the nearest dollar.

$3.$ Determine the present value of the depreciation tax shield for year $1.($Hint: Only discount for Year $1,$ not all $4$ years.$)$ Round your answer to the nearest dollar.

$4.$ Which one of the following is the proper treatment for the additional $$2,100$ of net working capital required in the current year?