Machine B is expected to produce the following real cash flows: Cash Flows ($ thousands) Co C1 -140 +130 Machine B C2 +141 O Replace now O Replace after 5 years C3 +153 Machine C was purchased five years ago for $200,000 and produces an annual real cash flow of $80,000. It has no salvage value but is expected to last another five years. The company can replace machine C with machine B either now or at the end of five years. The real opportunity cost of capital is 10%. When should the company replace machine C?

Machine B is expected to produce the following real cash flows: Machine C was purchased five years ago for $200,000 and produces an annual real cash flow of $80,000. It has no salvage value but is expected to last another five years. The company can replace machine C with machine B either now or at the end of five years. The real opportunity cost of capital is 10% When should the company replace machine C ? Replace now Replace after 5 years