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One year ago, your company purchased a machine used in manufacturing for $ 1 2 0 comma 0 0 0 . You have learned that
One year ago, your company purchased a machine used in manufacturing for $ comma You have learned that a new machine is available that offers many advantages; you can purchase it for $ comma today. It will be depreciated on a straightline basis over years, after which it has no salvage value. You expect that the new machine will contribute EBITDAearnings before interest, taxes, depreciation, and amortization of $ comma per year for the next years. The current machine is expected to produce EBITDA of $ comma per year. The current machine is being depreciated on a straightline basis over a useful life of years, after which it will have no salvage value, so depreciation expense for the current machine is $ comma per year. All other expenses of the two machines are identical. The market value today of the current machine is $ comma Your company's tax rate is and the opportunity cost of capital for this type of equip The NPV of the replacement is The NPV of the replacement is $Round to the nearest cent.
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