BlinkO's Co is considering replacing its copying machine,,,,,

	Old	New
Cost when new	30,000	50,000
Depreciation Method	Straight Line over 10 years to 0	Straight Line over 10 years to 0
Salvage 5 years from today	0	25,000
Net working capital (t=0 only) return at the end of the project	2,000	5,000
Market value today	18,000	50,000
Remaining life	5 years	5 years
Age	5 years	0

The new machine is expected to increase revenue by 60,000 per year and operating expenses by 12,000 per year. The tax rate is 40% and the costs of capital is 15%.

1. What is the initial investment for this project?

2. What is the incremental cash flow per year?

3. What is the difference in ending cash flow?

4. Should they replace the machine?