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Calligraphy Pens is deciding when to replace its old machine. The machine's current salvage value is $ 3 , 0 5 0 , 0 0
Calligraphy Pens is deciding when to replace its old machine. The machine's current salvage value is $ Its current book value is $ If not sold, the old machine will require maintenance costs of $ at the end of the year for the next five years. Depreciation on the old machine is $ per year. At the end of five years, it will have a salvage value of $ and a book value of $ A replacement machine costs $ now and requires maintenance costs of $ at the end of each year during its economic life of five years. At the end of the five years, the new machine will have a salvage value of $ It will be fully depreciated by the straightline method. In five years, a replacement machine will cost $ The company will need to purchase this machine regardless of what choice it makes today. The corporate tax rate is percent and the appropriate discount rate is percent. The company is assumed to earn sufficient revenues to generate tax shields from depreciation. Calculate the NPV for the new and old machines. Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to decimal places, eg
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