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One year ago, your company purchased a machine used in manufacturing for 390,000 You have leamed that a new machine is avalatie that ofors many

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One year ago, your company purchased a machine used in manufacturing for 390,000 You have leamed that a new machine is avalatie that ofors many advantages and you can purchase if for $140,000 todity. It will be depreciated on a straight-line basis over 10 years and has ne salvage value. You expect that the new machine wall preduce a gross margin (revenues minus operating axpenses other than depreciation) of $55,000 per year for the next 10 years. The current machine is expected to produce a gross margin of $20,000 per year. The current machine is being depreciated on a straghteline basis over a usetul 1o of 11 yearn, and has no savage value, so depreciation expense for the current machine is $8, 182 per year. The market value todiay of the ourrent machine is 350,000 . Your company/s tax tate is 45%, and the oppertunity cost of capital for tha type of equipment is 11W. Should your company replace its year-oid machine? The NPV of replaing the year oid machine is: (Round to the neacest deilay) Shovid your company replace ts year-did mackine? (Eelect the bett chaice beiow) A. Yes, there is a proft hom seplacing the machine. B. No, there it a ioss from repiacing the mactine

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