Question 8 Axis Company bought a used printing machine 5 years ago that it hoped would serve its printing needs for 10 years. Although the machine had performed as expected for the last five years, newer and more highly automated colour printers have now become available. The existing machine has a book value of $100,000 and is being depreciated at $20,000 a year toward a zero-salvage value in 5 years. However, today the machine can be sold for only $50,000. The new machine being considered costs $300,000 to purchase, plus an additional $10,000 in shipping and installation costs. Moreover, the new machine has an expected disposal value of $100,000 in 5 years. The appeal of the new machine is that it is completely automated (requires two fewer employees whose combined salaries and fringe benefits total $110,000 per year) and does color printing. The ability to sell color ads is expected to increase the paper's ads revenues from $150,000 per year to $200,000. However, the added color printing feature comes at the cost of higher maintenance and ink cost of $100,000 compared to only $80,000 for the older machine. Axis Company faces a 24% marginal tax rate and uses a 15% discount rate to evaluate equipment purchases for the printing machine. a) Calculate the initial cash outflow associated with replacing the older printing machine with the new b) Calculate the net present value if the company decided to buy the new printing machine one