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One year ago, your company purchased a machine used in manufacturing for $ 1 2 1 comma 0 0 0 . You have learned that
One year ago, your company purchased a machine used in manufacturing for $ comma You have learned that a new machine is available that offers many advantages and you can purchase it for $ comma today. It will be depreciated on a straightline basis over years and has no salvage value. You expect that the new machine will produce a gross marginrevenues minus operating expenses other than depreciation of $ comma per year for the next years. The current machine is expected to produce a gross margin of $ comma per year. The current machine is being depreciated on a straightline basis over a useful life of years, and has no salvage value, so depreciation expense for the current machine is $ comma per year. The market value today of the current machine is $ comma Your company's tax rate is and the opportunity cost of capital for this type of equipment is Should your company replace its yearold machine
what is the NPV of replacing the year old machine.
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