What is the npv of replacement

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Reference no: EM131960540

One year? ago, your company purchased a machine used in manufacturing for $90,000. You have learned that a new machine is available that offers many advantages and that you can purchase it for $160,000 today. The CCA rate applicable to both machines is 30%?; neither machine will have any? long-term salvage value. You expect that the new machine will produce earnings before? interest, taxes,? depreciation, and amortization (EBITDA) of $60,000 per year for the next ten years. The current machine is expected to produce EBITDA of $25,000 per year. All other expenses of the two machines are identical. The market value today of the current machine is $50,000. Your? company's tax rate is 38%?, and the opportunity cost of capital for this type of equipment is 11%. What is the NPV of replacement?

Reference no: EM131960540

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