A company is trying to decide whether it should replace a manually operated machine with a fully automatic version of the same machine. The existing machine is purchased 10 years ago, has a book value of $ 240,000 and a remaining life of 20 years. Salvage value was $ 40000. The machine has recently started causing problems with the breakdown and is costing the company $20,000 per year in maintenance expenses. The company has been offered $100,000 for an old machine as a trade-in on the automatic model which has a delivery price ( before allowance for trade-in ) of $ 220,000. It is expected to have a ten-year life and salvage value of $20,000. The new machine will require a modification costing $40,000 to the existing facilities but it is estimated to have a cost-saving in materials of $80,000 per year. Maintenance cost is included in the purchase contract are borne by the machine manufacturer. The tax rate is 40% ( applicable in case of revenue income as well as capital gain /loss ) Straight Line Method of depreciation over a period of 10 years will be used.

Find the relevant cash flows