One year ago, your company purchased a machine used in manufacturing for

$121,000.

You have learned that a new machine is available that offers many advantages and that you can purchase it for

$171,000

today. The CCA rate applicable to both machines is

42 %

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

$61,000

per year for the next ten years. The current machine is expected to produce EBITDA of

$26,000

per year. All other expenses of the two machines are identical. The market value of the current machine is

$50,000.

Your company's tax rate is

46

and the opportunity cost of capital for this type of equipment is

13 %

Should your company replace its year-old machine?

What is the net present value of the replacement?