The Tehachapi Glass Company is considering the replacement of a piece of equipment. The old machine machine has a carrying value of $800 and a remaining esimated life of five years, with no residual value at that time. Present residual value is $200. The new equipment will cost $1,200, including transporation and instalation. It has an estimated life of five years, with no residual value. Annual cash operating costs are $405 for the old machine and $165 for the new machine. Round answers two decimal places.
a. Compute the present value of the operating cash outflows for the old machine
b. Compute the present value of the operating cash outflows for the new machine
c. Compute the present value of the cash operating savings if the new machine is purchased.
d. What is the net present value of the replacement alternative?
