1. Your company is valuing a project regarding the replacement of technologically obsolete tnachinery and equipment and expand the capacity at the same time. Old machinery and equipment bought 4 years ago, with 10 year economic life and $950,000 price and zero salvage value. It can be sold in the market for $300,000. New machinery and equipment cost $1,500,000, S150,000 must be paid for customs duties and $50,000 for set up. (These 3 figures are the basis to calculate depreciation.) New machine has economic life of 6 years, straight line depreciation will be used, and is expected to generate additional sales of $650,000, also provide savings in costs amounting $70,000 per year. Additional working capital investment is $80,000, corporate tax rate is 20%, and required rate of return is 12%. Should the replacement be made? Use NPV for decision making