Micah Corporation is trying to determine the initial investment required to replace an old machine with a new one. The new machine costs $63,000. It will be depreciated under MACRS, using a 5-year recovery period. The 5-year MACRS depreciation rates are:

Year	1	2	3	4	5	6
Depreciation	20%	32%	19%	12%	12%	5%

The old machine was purchased 3 years ago at a cost of $50,000 and was being depreciated under MACRS, using a 5-year recovery period. The firm can sell the old machine for $26,000. The firm expects that a $19,000 increase in current assets and an $3,000 increase in current liabilities will accompany the replacement. The firms tax rate is 21%.

The new machine and the old machine are associated with the following EBITDA (earnings before interest, taxes, depreciation and amortization) over the 5-year life of the project:

Year	1	2	3	4	5
New machines EBITDA	109,000	109,000	109,000	109,000	109,000
Old machines EBITDA	85,000	85,000	85,000	85,000	85,000

Assume that the firm expects to liquidate the new machine at the end of its 5-year usable life, to net $18,000 after paying removal and cleanup costs. Had the new machine not replaced the old machine, the old machine would have been liquidated after 5 years to net $4,000. The firm expects to recover its net working capital investment upon termination of the project.

If the corporations capital structure is 50% debt and 50% equity, and the corporation will continue this capital structure to fund the investment on the new machine. Its cost of debt is 6.33% and cost of equity is 15%. Should Micah do the replacement? please show in excel