Q$\mathrm{.}9$ XYZ Ltd$.$ engaged in manufacturing of yarns, decided to establish a new factory. It wants to replace its

existing machine that generates revenue of Rs$.180\mathrm{.}00$ lacs with a new machine that will generate revenue

of Rs$.337\mathrm{.}50$ lacs to the company. The existing machine was purchased $5$ years ago. The net salvage

value of the machine is Rs$.26\mathrm{.}50$ lacs. Current book value of the machine is Rs$.$

$145\mathrm{.}50$ lacs and its realizable market value is Rs$.250\mathrm{.}00$ lacs. Depreciation of the machinery is on straight$-$

line basis. Capital cost of new machinery is Rs$.950\mathrm{.}00$ lacs. Both the machines have remaining life of $7$

years. The estimated net salvage value of the new machinery is Rs$.100\mathrm{.}50$ lacs. The company's sale will

grow by Rs$.250\mathrm{.}00$ lacs annually. The operating expense will decline to the extent of Rs$.33\mathrm{.}75$ lacs. The

new machine requires an additional inventory of Rs$.50$ lacs and will cause an increase in accounts payable

by Rs$.25\mathrm{.}00$ lacs. Corporate tax rate and cost of capital applicable are $25\%$ and $11\mathrm{.}5\%$ respectively.

Please advise whether firm should replace the old machinery with new machinery?