A company is evaluating a decision to buy a new production line that requires an immediate cash

investment of $ 5M. This production line will have a useful life of 5 years. The net cash flow during

this useful life had been estimated and it has a net present value of $ 8M. The company has an

existing production line that may be sold today for $ 1M. It is expected that the existing production

line has 3 years left in its useful life; the net cash flow during these 3 years are estimated & its NPV

$ 3M.