(individual steps in a problem). One question: What is the termination value (TV) for the analysis of replace 1 year later for the following example? You are facing the decision of whether to replace an old machine at your factory. The remaining book value of the old machine as of today is 55 . A new machine will cost $83 to purchase it now and the yearly maintenance expenses will be $37 a year. The new machine has a life of 5 years at which time it is estimated it can be sold for $45. The new machine will be depreciated down to zero over 5 years using straight-line depreciation. If the new machine is purchased, the old machine can be sold today for $30. However, if the old machine is not replaced today, it will continue to be depreciated down to zero using straight-line method over its remaining 4 years. It is estimated that the old machine can be sold for $24 in one year (at the end year 1). The maintenance cost per year for the old machine will be $22. Assume that the discount rate is 9% and the tax rate is 30%