Provide me a step by step solution with formulas for each of the sub questions here no excel can be used : To replace an old production line, Scotch Machinery needs to buy a new

one which cost $$1,200,000.$ This new line will depreciate on straightline basis over its $6-$year useful life. The old one cost the company

$$800,000$ four years ago and it had been depreciated also on straightline basis over its expected $10$ years useful life. Now, the old line can

be sold only for $$100,000.$ The new line should help the company to

increase sales by $$300,000$ per year. Expenses can be decreased by

$$50,000$ per year. Marginal tax applicable to the company is $40\%$ and

its required rate of return on any investment is $10\%.$

a$.$ Calculate the Net Present Value $($NPV$)$ of replacing the old production

line. Show the cash outlay and incremental cash flows clearly.

b$.$ Explain the impact you may find on NPV from the following :

i$.$ Increase in required rate of return on investment.

ii$.$ Increase in operating cost of the new production line.

iii. The old production line can only be sold for a smaller amount.