1. A manufacturer is considering replacing a production machine tool. The new machine, costing $37,000, would have a life of 4 years and no salvage value, but would save the firm $5000 per year in direct labor costs and $2000 per year in indirect labor costs. The existing machine tool was purchased 4 years ago at a cost of $40,000. It will last 4 more years and will have no salvage value. It could be sold now for $ l 0,000 cash. Assume that money is worth 8% and that differences in taxes, insurance, and so forth are negligible. Use an annual cash flow analysis to determine whether the new machine should be purchased.

   	A.	No
   	B.	Can not decide
   	C.	Yes
   	D.	Need more information