The Excon Machine Tool Company is considering the addition of a computerized lathe to its equipment inventory. The initial cost of the equipment is $$720,000,$ and the lathe is expected to have a useful life of five years and no salvage value. The cost savings and increased capacity attributable to the machine are estimated to generate increases in the firm's annual cash inflows $($before considering depreciation$)$ of $$192,000.$ The machine will be depreciated using MACRS for tax purposes. The $5-$year MACRS depreciation percentages as computed by the IRS are: Year $1=20\mathrm{.}00\%$; Year $2=32\mathrm{.}00\%$; Year $3=19\mathrm{.}20\%$; Year $4=11\mathrm{.}52\%$; Year $5=11\mathrm{.}52\%$; Year $6=5\mathrm{.}76\%.$

Warren is currently in the $40\%$ income tax bracket. A $7\%$ after$-$tax rate of return is desired.

Required:

A$.$ What is the net present value of the investment?

B$.$ Should the machine be acquired by the firm?

C$.$ Assume that the equipment will be sold at the end of its useful life for $$112,000.$ If the depreciation amounts are not revised, calculate the dollar impact of this change on the total net present value.

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