1. 10 points) A company is considering replacing an existing machine with a more modern one. Here are some of the details:

	Old Machine	New Machine
Purchase Price	$1,000,000 (7 years ago)	$1,500,000
Market Value	$200,000	$1,500,000
Book Value	$300,000	$1,500,000
Salvage Value	$0 (3 years from now)	$100,000 (10 years from now)
Age	7	0
Original Life	10	10
Yearly capacity	55,000 units	90,000 units
Sales Price	$7/unit	$7/units
Yearly expenses	$100,000	$90,000
Training expenses	not applicable	$30,000
Inventory	$55,000	$75,000

The tax rate is 40%. Assume straight-line depreciation and a RRR of 10%. Assume the salvage value of the investment is equal to zero when calculating the depreciation charge. Find the NPV associated with the project