INFORMATION OLD MACHINE:

Original Purchase Price

$ 550,000.00

Original Life

10 YEARS

Remaining Life

5 YEARS

Straight line depreciation in use

Salvage Value

$ 50,000.00

Current Fair Market Value

$ 260,000.00

INFORMATION NEW MACHINE A:

Purchase Price

$895,000.00

Estimated Life

5 YEARS

Use Straight Line Depreciation Method

Estimated Salvage Value

$ 10,000.00

Estimated Net Operating Cash Flow Increase/Decrease (Prior to Depreciation and Taxes)

End of Year 1

$ 100,000.00

End of Year 2

$ 150,000.00

End of Year 3

$ 250,000.00

End of Year 4

$ 200,000.00

End of Year 5

$ 200,000.00

ASSUMPTIONS:

Tax Rate

40%

WACC Rate

7%

If you keep the old machine, the NPV is:

A. 118,567

B. 117,653

C. 30,489

D.300,410