One year$$ ago, your company purchased a machine used in manufacturing for $ $120$ comma $000.$ You have learned that a new machine is available that offers many$$ advantages; you can purchase it for $ $160$ comma $000$ today. It will be depreciated on a$$ straight$-$line basis over $10$ years, after which it has no salvage value. You expect that the new machine will contribute EBITDA$($earnings before$$ interest, taxes,$$ depreciation, and$$ amortization$)$ of $ $50$ comma $000$ per year for the next $10$ years. The current machine is expected to produce EBITDA of $ $20$ comma $000$ per year. The current machine is being depreciated on a$$ straight$-$line basis over a useful life of $11$ years, after which it will have no salvage$$ value, so depreciation expense for the current machine is $ $10$ comma $909\mathrm{.}09$ per year. All other expenses of the two machines are identical. The market value today of the current machine is $ $50$ comma $000.$ Your$$ company's tax rate is $30\%,$ and the opportunity cost of capital for this type of equipment is $10\%.$ Is it profitable to replace the$$ year$-$old machine?

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Part $1$

The NPV of the replacement is $$$

$$

enter your response here. $($Round to the nearest$$ cent.$)$ One year ago, your company purchased a machine used in manufacturing for $$120,000.$ You have learned that a new machine is available that offers many advantages; you can

purchase it for $$160,000$ today. It will be depreciated on a straight$-$line basis over $10$ years, after which it has no salvage value. You expect that the new machine will contribute

EBITDA $($earnings before interest, taxes, depreciation, and amortization$)$ of $$50,000$ per year for the next $10$ years. The current machine is expected to produce EBITDA of $$20,000$

per year. The current machine is being depreciated on a straight$-$line basis over a useful life of $11$ years, after which it will have no salvage value, so depreciation expense for the

current machine is $$10,909\mathrm{.}09$ per year. All other expenses of the two machines are identical. The market value today of the current machine is $$50,000.$ Your company's tax rate is

$30\%,$ and the opportunity cost of capital for this type of equipment is $10\%.$ Is it profitable to replace the year$-$old machine?

The NPV of the replacement is $

$($Round to the nearest cent.$)$