The Baltic Company is considering the purchase of a new machine tool to replace an obsolute one. The machine being used for the iperation has a tax book value of $80,000, with an annual deprecition expense of $8,000. It has a salvage value ( resale value) of $40,000, is in good working order and will last,physically for at least 10 more years. The proposed machine will perform the operation so much more efficiently that Baltic engineers estimate that labor, material, and other direct costs of the iperation will be reduced $60,000 a year, if it is installed. The proposed machine costs $240,000 delivered and installed, and its economic life is estimated at 10 years, with zero salvage value. The company expects to earn 14 percent on its investments after taxes ( 14 percent is the firms cost of capital). The tax rate is 21 percent, and the firm uses straight-line depreciation. Any gain or loss on the machine is subject to tax at 21 percent. Should Baltic buy the machine?