Replacement Decision, Computing After$-$Tax Cash Flows, Basic NPV Analysis

is $$2,000,000.$ Straight$-$line depreciation with a half$-$year convention is being used for tax purposes. The cash operating costs of the existing MRI equipment total $$1,000,000$ per year.

You must use the Exhibit $19$ B$.1$ and Exhibit $19$B$.2$ present value tables and Exhibit $19\mathrm{.}5$ to solve the following problems.

Required:

Compute the NPV of each alternative. When required, round your computations and final answers to the nearest dollar. If the NPV is negative, enter your answer as a negative value.

Old MRI equipment

$x$

New MRI equipment

Should the company keep the old MRI equipment or buy the new one?