GE evaluates replacing old machinery with new equipment. In September 2043, the following data is provided:

• Cost of New Equipment: $1,200,000
• Annual Savings: $300,000
• Life of New Equipment: 6 years
• Salvage Value of Old Equipment: $50,000

Requirements:

• Calculate the net present value (NPV) of the replacement.
• Calculate the payback period.
• Prepare a recommendation report.
• Discuss qualitative factors influencing the replacement decision.