Lifetime Inc. wants to buy a new machine to be used in products that will replace an existing manual system. The cost of the new machine is $2,990,000. The equipment will last six years with no expected salvage value. The expected cash flows related to the implementation of the new machine is below.

Year	Cash Inflows	Cash Outflows
1	$1,600,000	$950,000
2	1,600,000	950,000
3	1,600,000	950,000
4	1,600,000	950,000
5	1,600,000	950,000
6	1,600,000	950,000

Lifetime Inc's required rate of return is 10%

Solve This question:

a) Using both non-discounted and discounted capital budgeting approaches, determine if the company should replace the existing manual system with the purchase of this machine.