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Listen Clearview Systems Ltd. is considering the purchase of a new machine for $375.000 The firm's old machine has a book value of $50,000 but can be sold today for $20,000. The new machine will be subject to a CCA rate of 25 percent. It is expected to save an annual cash flow of $62.000 per year for 8 years through reduced fuel and maintenance expenses. The company will need to invest $12.000 in spare parts inventory (working capital) when they purchase the machine. At the end of the 8 years the company believes it can sell the machine for $40,000 Clearview Systems Ltd. has a 12 percent cost of capital and a 30 percent tax rate. 1101 Paragraph Required: A Complete the following table by entering the present value, after-tax, of each of the following cash flows. A Complete the following table by entering the present value, after tax of each of the following cash flows. Enter all cash flows net of tax, where applicable. Round all cash flow numbers to zero decimal places . Enter cash outflows as negative numbers Present Value, after tax $ (375 000) 20000 - 12000 Description Instal investment Trade in Expense savings Salvage CCA tax shield Working capital (net of recovery) Net Present Value 9000 12000 358000 Use the following space to provide information in support of your calculation (add space by hitting the enter key) Use the following space to provide information in support of your calculation (add space by then move on to the next question. B. Should Defence Electronics Inc. purchase the machine? I Write your answer in the following space: NO. BECAUSE THE MACHINE GIVES THE NEGATIVE NPV. - BOTTOM OF THE ANSWER BOX (There are no questions below this sentence:)

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