2. Basket Wonders (BW) is considering replacing a basket weaving machine bought four years ago at Rs. 30,000. This is the only machine in this asset block. This machine has four years of remaining life. It depreciates at 25% WDV and can be currently sold for Rs. 6,000. This machine can be sold at its book value at the end of its remaining life of four years. The new machine will cost Rs. 50,000 plus Rs. 20,000 for shipping and installation. This machine is depreciated at 25% WDV and can be sold at Rs. 10,000 at the end of its effective life of four years. NWC will rise to Rs. 10,000 from Rs. 5,000. The new machine will not increase revenues but it will decrease operating expenses by Rs. 10,000 per year. BW uses a 16% hurdle rate to evaluate replacement decisions. It falls in the 30% tax bracket.