estion $4(8$ points$)$

Time allowance: $39$ minutes$)$ Soft$\_$Water Company is considering replacing its old machine for

a new industrial bottling machine. Project is a $10-$year project.This is a one$-$time project: it

completely ends at the end of $10$ years. You are asked to find what is the maximum price to pay for

the new machine. The following information is provided to you:

$$53$ was paid for the old machine that is to be replaced. It was bought $4$ years ago and as of today

there are $6$ years left of its scheduled life remaining. The old machine is being depreciated using

straight$-$line depreciation method. The market value of the old machine today is $$11$ and zero at the

end of its life $($in $6$ years$).$

$-$The new machine will be fully depreciated on a straight$-$line basis over its $10-y$ ear life. It is estimated

that this new machine can be sold at the end of year $10$ for $$8.$

$-$The new machine will not change revenues, but it is expected to generate savings in operating costs

in the amount of $$23($before taxes$)$ per year for $10$ years. These savings in costs are at year$-$ end.

$-$The new machine requires additional working capital of $$2.$

The corporate tax rate is $30$ percent.

The firm's required rate of return is $8$ percent.

All cash flows occur at year$-$end. Capital gains and losses are taxed at the corporate rate of $30\%$

when they are realized.

In answering the questions that aro answers in dollars, and use$/$round to two decimals, and

do not use the dollar $($$$)$ sign. For example if your answer is $$12\mathrm{.}5024$ then enter $12\mathrm{.}50$;