One year ago, your company purchased a machine used in manufacturing for $$105,000.$ You have

learned that a new machine is available that offers many advantages; you can purchase it for

$$165,000$ today. It will be depreciated on a straight$-$line basis over ten years and has no salvage

value. You expect that the new machine will produce a gross margin $($revenues minus operating

expenses other than depreciation$)$ of $$40,000$ per year for the next ten years. The current machine

is expected to produce a gross margin of $$24,000$ per year. The current machine is being

depreciated on a straight$-$line basis over a useful life of $11$ years, and has no salvage value, so

depreciation expense for the current machine is $$9,545$ per year. The market value today of the

current machine is $$50,000.$ Your company's tax rate is $45\%,$ and the opportunity cost of capital for

this type of equipment is $12\%.$ Should your company replace its year$-$old machine?