A company is considering replacing an existing assembly line with a new, automated one. The

existing assembly line was installed three years ago at a cost of $$500,000($CCA rate $=20\%).$ The

old equipment will last five more years, at which time its net resale value will be $$15,000,$ but it

could be sold now to net the firm $$40,000.$ The main benefit of the new equipment would be to

reduce yearly expenses from $$510,000$ on the existing line to $$200,000$ for the new, automated

line. However, the new line would require a $$20,000$ increase in inventory. The new line would

cost $$1,000,000,$ have a useful life of $5$ years and could be resold for $$50,000$ thereafter. The

corporate tax rate is $40\%$ and the opportunity cost of capital is $16\%.$ Should the existing line be

replaced?