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Problem Four :Kaplan Incorporated currently uses an older model BAII plusmilling machine that waspurchased two years ago for $10,000. The machine would be soldtoday for $3,000. If the oldmachine is not replaced, it is expected to operate for another 4years at which time its salvagevalue will be $1,200. The BAII plus currently generates revenuesof $13,000 per year. Themachine has annual operating costs of $8,000 per year. Thecompany maintains an investment of$1,750 in operating net working capital with the oldmachine.Kaplan Incorporated is considering acquiring a new millingmachine to replace its old millingmachine. The new milling machine has a capital cost of $12,000and an estimated useful life of 4years and an expected salvage value of $2,000. The companyexpects the new machine togenerate total revenues of $25,000 per year. The new machinewould have operating costs of$11,000 per year. With the new machine, the investment inoperating net working capital wouldbe increased to $2,500 and remain at this level until the end ofthe project.Both machines have a CCA rate of 30%. The company’s tax rate is35%. The project has arequired rate of return of 15% per year compounded annually.What is the NPV of the project, which replaces the old machinewith the new machine?Please show me how to do this question on excel showingall formulas. The answer was also provided as $9,694.16. However Iwant to know how the prof got to thisanswer.