Question: Mphoreng Industries is considering replacing its existing machine, which was purchased 3 years ago at a cost of R1 million. The machine is depreciated at

Mphoreng Industries is considering replacing its existing machine, which was purchased 3 years ago at a cost of R1 million. The machine is depreciated at 30% per annum and can be sold today at R900 000. The new machine will cost R700 000 with R20 000 installation cost and R5000 transportation costs. The use of the new machine will decrease the working capital with R8 000. Assume a 40% capital gains tax per annum.

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