Additional Exercise of Capital Budgeting 1. Rowen company is the publishing company. It uses the printing machine. The old printing machine has initial cost at $40,000. Its useful life is 5 years. It has no residual (salvage) value. The company uses the old machine for two years. It has operating cost at $5,000 per year. Rowen has been contracted from the salesman of printing machine. The new printing is new technology. Its initial cost is $30,000 and has the useful life 3 years. Its salvage value is $3,000. It has operating cost at $2,000 per year. If the company purchases the new machine, the old machine can be sold at $10,000. Required: 1. Should the company purchasing the new machine or not by replacing the old machine or not? (Use NPV for making the decisions) Assume no tax impact 2. Should the company purchasing the new machine or not by replacing the old machine or not? (Use NPV for making the decisions) Assume tax impact and tax rate is 30%. Additional Exercise of Capital Budgeting 1. Rowen company is the publishing company. It uses the printing machine. The old printing machine has initial cost at $40,000. Its useful life is 5 years. It has no residual (salvage) value. The company uses the old machine for two years. It has operating cost at $5,000 per year. Rowen has been contracted from the salesman of printing machine. The new printing is new technology. Its initial cost is $30,000 and has the useful life 3 years. Its salvage value is $3,000. It has operating cost at $2,000 per year. If the company purchases the new machine, the old machine can be sold at $10,000. Required: 1. Should the company purchasing the new machine or not by replacing the old machine or not? (Use NPV for making the decisions) Assume no tax impact 2. Should the company purchasing the new machine or not by replacing the old machine or not? (Use NPV for making the decisions) Assume tax impact and tax rate is 30%