QUESTION 2 Lemnos is considering replacing its current mask-making machine, which is installed 5 years ago. The initial installation cost was $15 million. The current market price of this machine is $10 million. The current net cash flow per year, using the current machine, is $1.5 million. The new machine in consideration costs $25 million. Using this machine, the net cash flow per year is expected to be $3.5 million. Both machines have an estimated remaining life of 5 years, at which time the market value of the old machine is $6 million, while the market value of the new machine is $16 million. Assume that the required rate of return is 9.00% p.a., there is no tax, and all relevant cash flows have been considered. Cash flows occur at the end of the year. Should the company purchase the new machine?