One yearago, your company purchased a machine used in manufacturing for $95,000.

You have learned that a new machine is available that offers manyadvantages; you can purchase it for $140,000 today. It will be depreciated on astraight-line basis over tenyears, after which it has no salvage value. You expect that the new machine will contribute EBITDA(earnings beforeinterest, taxes,depreciation, andamortization) of $40,000 per year for the next ten years. The current machine is expected to produce EBITDA of $21,000 per year. The current machine is being depreciated on astraight-line basis over a useful life of 11years, after which it will have no salvagevalue, so depreciation expense for the current machine is $8,636 per year. All other expenses of the two machines are identical. The market value today of the current machine is $50,000. Yourcompany's tax rate is 40%, and the opportunity cost of capital for this type of equipment is12%.

The NPV of the replacement is $____?

Is it profitable to replace theyear-old machine?