You are required to work the following problem, using a discounted cash flow (NPV) analysis. You should model your answer on the text approach in Chapter 8. Harry Hill is considering replacing an old machine with a new one from Li Xu because one year ago a feasibility study on the new machine conducted for Harry by PQ Ltd, an external firm of consultants, costing Harry $20,000, concluded in favour of buying this new machine. The old machine (bought 5 years ago from Tom Kat) cost $280,000, while the new one will cost $320,000, fully financed by a 5 year 8% per annum interest only loan. "The new machine will be depreciated prime cost to $50,000 over its 5 year life. Harry estimates that it will be worth $40,000 (salvage value) after 5 years. The old machine is being depreciated at prime cost to zero over its original expected life of 10 years. However, Harry can sell the old machine today for $90,000. "The new machine will save Harry $80,000 a year in cooling costs. However, with the new machine, Harry will lose $10,000 per annum of existing sales to Tom Kat, which Tom has regularly bought each year over the past 5 years from Harry's business. "With the new machine, a one-off amount of cleaning supplies (current assets) at a cost of $12,000 will be required, and Harry estimates that accounts receivable (also current assets) will increase by $15,000. Both of these increases in working capital will be recouped at the end of the new machine's life in five years time. "Harry's cost of capital is 10%. The tax rate is 30%. Tax is paid in the year in which earnings are received. "REQUIRED(a) Calculate the net present value of the proposed change, that is, the net benefit or net loss in present value terms of the proposed changeover.(b) Should Harry purchase the new machine? State clearly why or why not." Research and Marking GuideUnlike Part A, text-book and other references are not required for Part B. You should consult the text, Chapter 8, and other available references for guidance as to the setting out of the capital budgeting analysis and the basis for decisions.Marking will follow generally the style used in marking examination questions, that is, 15 marks are allotted to this Part, from which deductions will be made for errors in calculation, incorrect treatment of items and lack of knowledge. Submission of Assignments The ASSIGNMENT MUST GO THROUGH TURNITIN.A soft copy is not acceptable. Please submit to Lecturer a hard copy, including Cover Sheet (see Moodle) & Marks and Comments Page (see page 3 attached. If Marks and Comments page is not submitted or in-complete, 1 mark will be deducted from "Presentation"). Keep a soft copy in case of misadventure.