This question is similar to question 2 but annual revenue is given and sale value is unknown: Suppose you have to decide whether sell an old machine or keep it with a major overhaul. You can: Sell the machine at time zero for X dollars with zero book value and paying tax of 40% Keep the machine, which requires a major overhaul cost of $1, 000, 000 at time zero. The overhaul cost is depreciable from time 0 to 5 (over six years) based on MACRS-5 years life depreciation with the half year convention (table A-1 at IRS). In this case machine can produce and generate equal annual revenue of 900, 000 dollars for five years (years 1 to 5) and salvage value of the machine will be $250, 000 with zero book value at the end of years 5. The operating cost of the machine will be $400, 000 per year from years 1 to years 5. Calculate the sale value, X, that can break-even the NPV of keeping the machine. Consider 40% income tax rate and after-tax minimum ROR of 8%