Question: You are operating an old machine that is expected to produce a cash inflow of $5,300 in each of the next three years before it

You are operating an old machine that is expected to produce a cash inflow of $5,300 in each of the next three years before it fails. You can replace it now with a new machine that costs $23,000 but is much more efficient and will provide a cash flow of $11,500 a year for four years. Should you replace your equipment now? The discount rate is 15%.

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