Rawang Packaging Industries is considering replacing a 10-year-old manual pressing machine with a new automated one. The present and expected situation resulting from the replacement are given below: Installed Cost of machine Machine cost Age Useful Life Salvage value Shipping cost - delivery of new machine Freight insurance-shipping new machine Installation & commissioning - new machine Labour cost Maintenance cost Electricity cost Account receivable Inventory Accruals Account Payable Long-Term Loan 1. 2. 3. Existing Proposed Old Machine New Machine $90,000 n.a 4. 5. n.a 10 years 15 years 0 n.a n.a n.a $120,000 $ 50,000 $ 75,000 $35,000 $40,000 $10,000 $40,000 $25,000 $200,000 New 5 years $ 20,000 $ 11,000 $ 4,000 $ 5,000 $100,000 $ 40,000 $ 80,000 Other information available are: Incremental increase in sales is expected to be $40,000 yearly for the next 5 years. Depreciation is based on a straight-line method. The existing old machine can be sold today for $20,000 and will be worthless at the end of its useful life. Tax rate is 25% Risk-adjusted hurdle rate = 13.50% $45,000 $60,000 $15,000 $50,000 $95,000 Using NPV and IRR criteria, determine whether the company should proceed with the replacement?