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%

1. If you keep the old machine, the NPV is:

2. If you sell the old machine and buy new machine A, the NPV will be:

3. What decision do you suggest?

4. If we go ahead and do the project, which cash flow should be most certain to happen in the amount that we projected?

If you keep the old machine, the NPV is: