The Container Corporation of America is considering replacing an automatic painting machine purchased 9 years ago for \($700,000.\) It has a market value today of \($40,000.\) The unit costs \($350,000\) annually to operate and maintain. A new unit can be purchased for \($800,000\) and will have annual O&M costs of \($120,000.\) If the old unit is retained, it will have no salvage value at the end of its remaining life of 10 years. The new unit, if purchased, will have a salvage value of \($100,000\) in 10 years. Using an EUAC measure and a MARR of 20 percent, perform a before-tax analysis to see if the automatic painting machine should be replaced if it is taken as a trade-in for its market value of \($40,000.

a. Use the cash flow approach (insider’s viewpoint approach). 

b. Use the opportunity cost approach (outsider’s viewpoint approach).