You decided to replace your existing machinery and equipment with more efficient ones with newer technology. Your old machinery and equipment was bought 5 years ago, with a price 1,740,000, and economic life of 12 years. It can be sold in the market for 540,000. New machinery & equipment cost 2.450,000, economic life 7 years, 10% will be paid for customs duties, and 175,000 for assembly. Both machinery and equipment groups have no scrap value and depreciated using straight- line method New machinery & equipment is expected to increase sales by 3,250,000 annually, gross margin is 60% of sales, fixed operating costs stay the same. ACP stays at its original 45 days level, all sales on credit, credit purchases 10% of sales, payment period 60 days, inventory turnover is 6.5 times. Assume 1 year is 360 days. Corporate tax rate is 20%, WACC is 14%. Should the replacement be made? Use NPV for decision making. You decided to replace your existing machinery and equipment with more efficient ones with newer technology. Your old machinery and equipment was bought 5 years ago, with a price 1,740,000, and economic life of 12 years. It can be sold in the market for 540,000. New machinery & equipment cost 2.450,000, economic life 7 years, 10% will be paid for customs duties, and 175,000 for assembly. Both machinery and equipment groups have no scrap value and depreciated using straight- line method New machinery & equipment is expected to increase sales by 3,250,000 annually, gross margin is 60% of sales, fixed operating costs stay the same. ACP stays at its original 45 days level, all sales on credit, credit purchases 10% of sales, payment period 60 days, inventory turnover is 6.5 times. Assume 1 year is 360 days. Corporate tax rate is 20%, WACC is 14%. Should the replacement be made? Use NPV for decision making