ABC is looking to purchase a new machine for a 4 year project, that will cost $800,000 and replace the old machine that they were using.

The old machine was being depreciated but has been fully depreciated

The original cost of the old machine was $500,000, and it can be sold for $75,000.

The new machine's depreciation schedule and salvage value are listed below.

The new machine will result in annual cost savings of $225,000.

The new machine cannot make one of the company's old products so as a result they will lose $8,000 a year

in after-tax profits. The project requires $10,000 in working capital that will be recpatured at the end of the project.

Accelerated depreciation

Should they go forward with the change?