Needco Supplies-Canada employee Stella Needleson was asked to determine if the current process of dying writing paper should be retained or a new, environment friendly process should be implemented. Estimates or actual values for the two processes are summarized below. She performed an after-tax replacement analysis at 10% per year and the corporation€™s effective tax rate of 32% to determine that economically, the new process should be chosen. Was she correct? Why or why not? Canadian tax law does not impose the half-year convention requirement. Monetary units are in Canadian dollars.

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Current Process New Process First cost 7 years ago, $ First cost, $ -450,000 -700,000 Remaining life, years Current market value, $ OE, $/year Future salvage, $ Depreciation method 5 10 50,000 -160,000 -150,000 50,000 SL SL