Q$\mathrm{.}1.$ XYZ Itd is considering to replace one of its existing machine with new one. Assume the company has only this machine in the block which is subject to depreciation of $20$ percent on WDV basis. Should the company replace the machine? $(10$marks$)$

P$.$T$.$O$.$

$6832$

$2$

$\backslash$table$[[$Existing machine,New machine$],[$One full time operator salary, $36,000,$Fully automated no operator is required$],[$Variable overtime $3000,$Cost of new machine $180000],[$Fringe benefits $3000,$Transport charges $3000],[$Cost of defects $3000,$Installation costs $15000],[$Price of existing machine $60000,$Expected life $5$ years$],[$Useful life $5$ years,Annual maintenance $3000],[$Salvage value of the machine $36,000,$Cost of defects $3000],[$Tax rate $35\%,$Salvage value at year $5^{th}$ year $20000],[$Required rate of return $15\%,]]$

$\backslash$table$[[$Year$,1,2,3,4,5,6],[$PV Factor@$15\%,0\mathrm{.}870,0\mathrm{.}756,0\mathrm{.}658,0\mathrm{.}572,0\mathrm{.}497,0\mathrm{.}432]]$