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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

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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 and that you can purchase it for $170,000 today. The CCA rate applicable to both machines is 40%; neither machine will have any long-term salvage value You expect that the new machine will produce earnings before interest, taxes, depreciation, and amortization (EBITDA) of $50,000 per year for the next ten years. The current machine is expected to produce EBITDA of $20,000 per year. All other expenses of the two machines are identical. The market value today of the current machine is $50,000. Your company's ax rate Is 38%, and he opportunity c sto capita for his peo e ment s % S d our m any place ts ear-old machine? What is the NPV of replacement? The NPV of replacement is $ (Round to the nearest dollar.) Should your company replace its year-old machine? o A. Yes, there is a profit from replacing the machine. B. No, there is a loss from replacing the machine

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