4. Replacement decision. The electronics company is deciding if the manually operated equipment should be replaced by fully automatic equipment. You have the following information Current situation Two workers with the salary 20 000 USD per year per one worker Maintenance cost is 10 000 USD per year Waste (e.g. defective work) is 12 000USD per year Economic lifetime of the machinery 10 vears (investment was made 5 years ago) Salvage value is 0. (e.g. book value in 5 years, also market value is zero) Linear depreciation method (8 000 per year) Current market value if sold 24 000USD Tax rate 34% on EBT New project Investment (new machinery) 120 000USD Two workers salary is saved Maintenance cost is 15 000USD Waste: 6 000USD per year Economic lifetime 5 years Linear depreciation method Book value market value in five years. (both book and market values are 0) Required rate of return is 12% Should the company replace the existing machinery? Your task is to prepare the cash flow budget and evaluate the project, based on NPV