Question 1 ( 6 points) As a result of stricter greenhouse gas emissions regulations, NoBrown is contemplating to replace its newly purchased machine (machine A) with another and potentially greener (machine B). The company will eventually decide to do the replacement if it is financially a better deal. Today's annual EBITDA is 1 million and is expected to stay constant in the future. Machine A has just been bought (period 0 ) at the cost of 2 million . Its expected life is four years and is subject to linear depreciation. Its resale (market) value would be 200000 at the The acquisition of machine B would generate an increase in the annual EBITDA (beforetax) of 500000 for the-next four years relative to the existing situation. The working capital requirement (WCR) would increase from 0 to 75000 at the end of this year (t=1) and stay constant for the following years. The cost of Machine B is 2.4 million which can be depreciated linearly over the next four years. At the end of this period, its resale (market) value is estimated at 500000E. If machine B is acquired, the firm would sell machine A today (t=0) at a price of 1.5 million (but there will be no tax shield for the lower resale price). No Brown Inc. faces a corporate tax rate of 25% and its cost of capital is equal to 10%. Assume that tax on capital gains are paid at the same time as the sale of the machine. Determine whether No Brown Inc. should replace machine A by machine B