Machine B is expected to produce the following real cash flows:

Cash Flows ($ thousands)
Machine	C0	C1	C2	C3
B	127	+117	+128	+140

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 12%.