Q1. Should the company replace the original machine with the new machine with the information given in the table? Original Machine New Machine -- Initial cost = 100,000 - Initial cost = 150,000 - Annual depreciation = 9,000 - 5-year life - Purchased 5 years ago - Salvage in 5 years = 0 -Book Value = 55,000 - Cost savings = 50,000 per year - Salvage today 65,000 - 3-year MACRS depreciation - Salvage in 5 years = 10,000 . Required return = 10% Tax rate -40%