if you have to choose between new machine and old machine and you have the following information:

The New Machine

Initial cost = 300,000, 5-year life, Salvage in 5 years = 0, Cost savings = 49,000 per year, 3-year MACRS depreciation, Required return = 10%, Tax rate = 40%

The Original Machine

Initial cost = 200,000, Annual depreciation = 18,000, Purchased 5 years ago, Book Value = 110,000, Salvage today = 130,000, Salvage in 5 years = 20,000

Make a decision whether to buy the new machine or keep the old machine through calculating CFFA and using NPV method.

If the Recovery Year is: And the Recovery Period is: 3-Year 5-Year 7-Year 1 2 3 4 5 6 7 8 The Depreciation Rate is: 33.33 20.00 44 45 32.00 14.81 19.20 7.41 11.52 11.52 5.76 14.29 24.49 17.49 12.49 8.93 8.92 8.93 -.4.46