Suppose we are thinking about replacing an old computer with a new one. The old one cost us $$1\mathrm{.}4$ million; the new one will cost $$1\mathrm{.}7$ million. The new machine will be depreciated straight$-$line to zero over its five$-$year life. It will probably be worth about $$325,000$ after five years.

The old computer is being depreciated at a rate of $$281,000$ per year. It will be completely written off in three years. If we don$$t replace it now, we will have to replace it in two years. We can sell it now for $$450,000$; in two years, it will probably be worth $$130,000.$ The new machine will save us $$315,000$ per year in operating costs. The tax rate is $22$ percent, and the discount rate is $12$ percent.

a$.$ Calculate the EAC for the old computer and the new computer.

b$.$ What is the NPV of the decision to replace the computer now?$($A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$