One year ago, your company purchased a machine used in manufacturing for $$110000.$ You have learned that a new machine is available that offers

many advantages; you can purchase it for $$170000$ 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 $$50000$ per year for the next ten years. The current

machine is expected to produce a gross margin of $$20000$ 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 $$10000$ per year. The market value today of the current machine is $$65000.$

Your company's tax rate is $40\%,$ and the opportunity cost of capital for this type of equipment is $11\%.$ Should your company replace its year$-$old machine?