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

$105,000.

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

$150,000

today. The CCA rate applicable to both machines is

20%;

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

$45,000

per year for the next 10 years. The current machine is expected to produce EBITDA of

$22,000

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

35%,

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

12%.

Should your company replace its year-old machine?