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You are trying to decide whether to replace a machine on your production line. The new machine will cost SI million, but will be more

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You are trying to decide whether to replace a machine on your production line. The new machine will cost SI million, but will be more efficient than the old machine, reducing costs by S500,000 per year. Your old machine is fully depreciated, but you could sell it for $50,000. You would depreciate the new machine over a 3-year life using MACRS, the new machine will not change your working capital needs. Your tax rate is 35%, and your cost of capital is 9% Note: the depreciation rate of 3-year life for MACRS: 33.33, 44.45, 14.81,7.41) (A) What is the salvage value of the old machine? (B) What are the incremental cash flows for the replacement? (please construct a table to show the calculation) (C) Should you replace the machine

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