MAK Industries is considering a new assembly line costing six million dollars.The line will be full depreciate by the straight-line method over five years.The operating cost of the machine are $1,100,000 per year.

The existing assembly line has 5 years remaining before will be fully depreciated and has a net value of three million dollars.The current salvage value is $2,400,000.The operating cost of the current machine is $2.1 million per year.MAK Industries has a 46% tax rate and a required rate of return of 12%.

Calculate the NPV associated with replacing the machine.Based on that answer should MAK Industries replace the machine?Why?