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You have seven old machines in your shoe factory. They require much maintenance to keep them in good working order. Moreover, they are costly to

You have seven old machines in your shoe factory. They require much maintenance to keep them in good working order. Moreover, they are costly to operate in terms of labor and fuel, and about 5% of the shoes are defective. Each machine has a ten-year remaining expected life. Newer, more efficient machines cost $150,000 each. They are highly automated and require far less labor and fuel to operate and do not produce defective shoes. Assume that they also have an estimated useful life of ten-years. You estimate that replacing the old machines will result in incremental after-tax cash inflows of $25,000 per year per machine. What is the NPV of a new machine if the WACC is 10% and if each old machine has an after-tax salvage value of $6,000?
A.$9,414.18
B.9,314.18
C.9,514.18
D.9,714.18

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