B$-$Tel, Inc. is considering replacing their existing manufacturing unit with a new, improved unit that

will cost $$35$ million including installation and shipping costs. This will increase their annual revenue

from $$20$ million to $$35$ million. Their annual cash costs will also increase from $$10$ million to $$12\mathrm{.}5$

million. The life of the machinery is expected to be $5$ years and it was decided to be depreciated

using straight$-$line depreciation approach. If the company is in the $30\%$ tax bracket and if the

applicable discount rate is $8\%,$ should the company go ahead with the investment in the new

manufacturing unit? Assume that the company can sell the existing unit for $$5$ million, which is the

book value of the unit. Annual depreciation on the existing unit is $$1$ million. The new unit will

become obsolete and be abandoned after $5$ years of usage.