One year ago, your company purchased a machine used in manufacturing for $100,000. You have learned that a new machine is available that offers many advantages and that you can purchase for $140,000 today. The CCA rate applicable to BOTH machines is 40%; NEITHER MACHINE WILL HAVE LONG-TERM SALVAGE value. You expect that the new machine will produce earnings before interest, taxes depreciation, and amortization (EBITDA) of $55,000 per year for the next 10 years. The current machine is expected to produce EBITDA of $24,000 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 tax rate is 38%, and the opportunity cost of capital for this type of equipment is 11%.

Should you replace this year old machine?

a.) The NPV of the replacement is $___ (round to the nearest dollar)

b.) Should your company replace its year old machine?

A. No, because the only time a machine should be replaced is when it stops working completely

B. Yes, because a new machine will always be an improvement for the comapny

C. Yes, because there is a profit from replacing the machine

D. No, bc there is a loss from replacing the machine