The manager of the Tool & Die department of WM3 ’s facility in South Carolina wants to replace an existing CNC machine with a new one by the end this year (2017). The new machine has a useful life of 10 years and costs $400,000 plus installation costs of $15,000. It will generate annual revenues of $230,000 and annual expenses of $100,000. This new machine is depreciated over a seven years MACRS property class and has no salvage value. Current machine has a book value of $90,000, remaining depreciable life of five years with no salvage value, and it is depreciated through the straight line depreciation method. Current machine can be sold by December 31, 2017 for $55,000. If retained, current machine will be overhauled with a cost of $180,000 at the end of year five to extend its useful life for five more years. Current machine will generate annual revenues of $150,000 and annual expenses of $120,000
General Requirements: You must perform an after-tax analysis. Let MARR be 15% and tax rate be 34%. You can use any analysis method you want (PW, EUAW, ΔIRR, ΔB/C).