Suppose you need to decide whether to keep a machine or replace it with a new one: Old machine: Old machine can operate for 5 years with operating cost of $120,000 per year. New machine: Replacing old machine with new one requires capital cost of $250,000 in year zero (zero salvage value for old machine). Capital cost is depreciable from year 0 to year 5 (over six years) based on MACRS 5-year life depreciation with the half year convention (table A-1 at IRS ). New machine can produce with lower operating cost of $45,000 per year for 5 years (from year 1 to year 5) Assume both machines produce similar good with similar value that yields similar revenue. Consider income tax of 38% and minimum rate of return 16%. Construct incremental analysis and conclude which alternative is more economically satisfactory? Please show your work. Table A-1 3-, 5-, 7-, 10-, 15-, and 20-Year Property Half-Year Conventi on Depreciation rate for recovery period Year 3-year 10-year 20-year 5-year 15-year 7-year 10.00% 18.00 33.33% 44.45 20.00% 32.00 14.29% 24.49 17.49 5.00% 9.50 8.55 3.750% 7.219 2 3 19.20 14.81 14.40 6,677 11.52 9.22 7.41 11.52 11.52 12.49 8.93 7.70 6.177 5.713 4 6.93 5 8.92 8.93 7.37 6.55 6.55 6.56 6.23 5.285 6 5.76 5.90 4.888 4.46 5.90 5.91 4.522 4.462 9 10 6.55 5.90 4.461 3.28 5.91 5.90 5.91 4.462 4.461 4.462 11 12 13 14 5.90 4.461 4.462 5.91 15 16 2.95 4.461 4.462 4.461 4.462 17 18 19 20 4.461 2.231 21