Company A is evaluating the purchase of some new equipment to replace the exiting one. The existing equipment was bought 5 years ago for $300,000 is worth $100,000 today, and will have a salvage value of $5,000 after 5 more years. It generates revenues of $100,000 per year. The costs of operating it are $60,000. The company currently has $20,000 invested in net operating working capital.

The new equipment will cost $500,000. It will increase annual revenues by $100,000 during its 5-year life. In addition, it will reduce operating costs by $15,000 per year and will allow the company to reduce its investment in net operating working capital to $10,000. At the end of 5 years, the new machine will have a salvage value of $50,000.

The companys corporate tax rate is 40%, the CCA rate is 25% and the required rate of return is 10%. Assume the asset class remains open. Using net present value (NPV) calculation to determine if the company should purchase the new scanner. Show all work.