Redo Problem 14.19 with the following additional information.
• The old machine has been depreciated according to a seven-year MACRS.
• The new machine also will be depreciated under a seven-year MACRS class.
• The marginal tax rate is 40%, and the firm's after-tax MARR is 10%.
In Problem 14.19
Four years ago, an industrial batch oven was purchased for $23,000. It has been depreciated over a 10-year life and has a $1,000 salvage value. If sold now, the machine will bring $2,000. If sold at the end of the year, it will bring $1,500. Annual operating costs for subsequent years are $3,800. A new machine will cost $50,000 with a 12-year life and have a $3,000 salvage value. The operating cost will be $3,000 as of the end of each year with $6,000-per-year savings due to better quality control. If the firm's MARR is 14%, should the machine be purchased now?