siganture equipment company is a toronto based company which is considering the replacment of some technolgically obsolete machinery with the purchase of a new machine for 72000. the older machine could be expected perform the required operation for another 10 years. the older machine has a salvaged value 9000. the new machine with the latest in technolical advance will perform essentially the same operations as the older machine but will effect cost saving 17500 per year in labour and materials. the new machine is also estimated to last for 10 years at which time it could be salvaged for 11500. to install the new machine will cost 7000. signs has a tax rate of 30 percent, and its cost of capital is 15 percent. for tax purposes the company its capital cost allowance is 20 percent.

Requird :

A. calculate the initial cash flow of the replacement invesment?

B.calaulate the present value of the annual after- tax cost saving (PV of CFT):

c. calculate the CCA tax shield of the Investment ?

D. calculate the present value of the terminal Non- operating cash flow:

E. calculate the NPV of this Investment and decide whether or not sign for Fields machinery Ltd purchase the new machine?