Question: Suppose we are thinking about replacing an old computer with a new one. The old one cost us $1,250,000; the new one will cost, $1,510,000.

 Suppose we are thinking about replacing an old computer with a

Suppose we are thinking about replacing an old computer with a new one. The old one cost us $1,250,000; the new one will cost, $1,510,000. The new machine will be depreciated straight-ine to zero over its five-year life. t will probably be worth about $250,000 after five years. The old computer is being depreciated at a rate of $250.000 per year. It will be completely written off in three years. If we don't replace it now. we will have to replace it in two years. We can sell it now for $370,000; in two years $115,000. The new machine will save us $285,000 per year in operating costs. The tax rate is 38 percent, and the discount rate is 12 percent , it will probably be worth a1 Calculate the EAC for the old computer and the new computer (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your final answers to 2 decimel places. (e.g., 32.16)) EAC New computer Old computer t is the NPV of the decision to replace the computer now? (Negative amounts hould be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g.. 32.16)) a.2Wha NPV

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