ProgressIncorporated is considering buying a new machine to increase production.It will cost $200,000 to purchase,$10,000 tomodify and $5,000 tohave it installed.It has a five-yearclass life.Atthe end of threeyears theyplan to sell the machine for $95,000.The new machine will allow Progressto increase revenues by $80,000 each year butexpenseswillincrease by $5,000 each year.Inventory will decrease by $6,000and wages payable will increase by $2,000 if the machine is purchased.

Straight-linedepreciation will be used.Progress's marginaltax rate is 34% and its cost of capital is7%.ShouldPIpurchase the new machine?