Analysis of a replackment project

$t=0.$

The old machine maid purchased before the niw tax law, so it is being dopreciated on a siraight$-$line basis. It has a book value of

$$200,000($at year $0)$ and four more years of depreciation left $($ $$50,000$ perr yiar$).$

value $($at year o$)$ of $$300,000.$

Poplacing, the old mactine will require an invistment in net opearating workinc, capital $($NOWC$)$ of $$45,000$ that will be rectiv$$red at the

end of the projoct's lifo $($year $6).$

costs $($incluting depreciation esponse$)$ quenarated using the new equipment and that earrod using the old equipmant.

The projoct's cost of capital is $13\%.$

The compariy's annual tax rate is $25\%.$

Year $0$

Year $1$

Year $2$

Year $3$

Year $4$

Year $5$

The fout prisent value $($NF$)$ of this riplatoment projert is:

$$213,882$

$$245,964$

$$181,800$

$$256,658$