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(Cash-flow analysis, replacing equipment) The Car Clean company operates a car wash business. The company's current cleaning machine was bought 2 years ago at the
(Cash-flow analysis, replacing equipment) The "Car Clean" company operates a car wash business. The company's current cleaning machine was bought 2 years ago at the price of $60,000. The life span of this machine is 6 years, the machine has no disposal value, and the current market value of the machine is $20,000; depreciation is on a straight-line basis. The company is considering replacing the old car washing machine with a new machine. The cost of the new machine is $100,000, and its life span is 4 years. The straight-line depreciation is computed on the basis of the purchase price net CAR CLEAN COMPANY \begin{tabular}{l|l} \hline Discount rate & 15% \\ \hline Tax rate & 40% \\ \hline \end{tabular} Old machine Cost 60,000 \begin{tabular}{ll} \hline Life (years) & 6 \\ \hline \end{tabular} \begin{tabular}{l|l} \hline Depreciation & 10.000 \\ \hline \end{tabular} Current value Current book value 20,000
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