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For the next question, a + sign is optional for any answer that is a net cash inflow, but a - sign is mandatory for

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For the next question, a "+" sign is optional for any answer that is a net cash inflow, but a "-" sign is mandatory for any answer that is a net cash outflow. One year ago, Maggi Ltd purchased a machine used in manufacturing for $ 130, 000. The company has learned that a newer, more-advanced model of this machine is available that offers many advantages. Maggi is able to purchase and install the new model for a total cost of $146,000 today. It would be depreciated on a straight-line basis to zero over a ten-year tax life and will have no salvage value. Maggi expects that the new machine will produce a "gross margin" defined as revenues minus variables costs of exactly $59,000 per year for the next ten years. Maggi's current machine is expected to continue to produce its gross margin of $19,000 per year. This older model machine is also being depreciated on a straight-line to zero basis over its original tax life of 11 years. It will also have no salvage value after this time. However, if sold today, the current machine would attract a salvage value in the market of $67,000. Assume that Maggi Ltd's marginal tax rate is 36.0% and the opportunity cost of capital for this type of equipment is 10.2%. Should Maggi Ltd replace its year-old machine with the newer machine? (a) The NPV of replacing the year-old machine is $ (Round your answer to the nearest dollar) (b) Maggi Ltd should replace its year-old machine. (Select the best choice below) (No answer given)

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