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One year ago, your company purchased a machine used in manufacturing for $95,000. You have learned that a new machine is avalable that offers many

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One year ago, your company purchased a machine used in manufacturing for $95,000. You have learned that a new machine is avalable that offers many advantages; you can purchase it for $160, 000 today, It wil be deprecialed on a straight-line basis over ten years, after which it has no salvage value. You expect that the new machine will contribute EBiTOA (eamings before inlorest. taxes, depreciation, and amortization) of $55,000 per year for the next ten years. The cument machine is expected to produce EBITDA of $25.000 per year. The current machine is being depreciated on a stragh-line basis over a useful Ife of 11 years, afer which in wil have no salvage value, so depreciason expense for the cument machine is $6.636 per year. Al other expenses of the two machines are identical. The market value todasy of the current machine is $50,000. Your companys tax rate is 42%, and the opportunity cost of captal for this type of equipment is 11%, is it proftibile to roplace the year-old machine? The NPV of the replacement is : (Round to the neareat dollar.)

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