ile Bowl Bottling Company is contemplating the replacement of one of its bottling machines with a newer and more efficient one. The old machine has a book value of $600,000 and' a remaining useful life of five years. The firm does not expect to realize any return from scrapping the old machine in five years, but it can be sold today to another firnn in the industry for $265.000. old machine is heing depreciated toward a zero salvage value, or by $120,000 per year, using the straight-line method. The new machine has a purchase price of S1,175,000, an estimatcd uselul life and MACRS class life of live years, and an estimated market value of si-45,000 at the end of ive years. (See Table 10A-2 at the end of this chapter for MACRS recovery allowance percentages.) The machine is expected to economize on electric power usage. lahor, and repair cnsts, which will save Boyd $230,000 each year. In addition, the new machine is expected to reduce the number of defective bottles, which will save an additional $25,000 annually The company's marginal tax rate is 40 percent, and it has a 12 percent required rate of return