Konock Engineering Limited is considering modernization of its machine. The existing machine was bought 5 years ago at a cost of Taka 10,50,000. It is being depreciated in straight line method over a 10-year useful life towards a salvage value of Taka 50,000. However, it can be sold now at Taka 300,000. The new machine will cost Taka 22,00,000. It can be used for 5 years and has an expected salvage value of Taka 400,000 at the end. Under the tax incentive plan of the government, the firm will be able to charge depreciation at 30%, 25%, 20%, 15% and 10% of cost in year 1, 2, 3, 4 and 5 respectively. Already the firm analyzed a technical feasibility of the replacement of machine and paid Taka 35,000 to an engineer to this end. If the new machine is installed, total revenue will increase by Taka 6,00,000 every year. Also, total cash operating cost will reduce by Taka 100,000 annually. However, it will require additional working capital of Taka 50,000. Corporate tax rate is 30%. The weighted average cost of capital is 12. Should the firm replace the machine?