0.15 A product is currently being manufactured on an old machine. The costs of the product are: Unit costs Labor 0.40 Variable other Fixed overheads 0.25 Total 0.80 In the past year, 100.000 units were produced and sold for S.60 per unit. It is expected that the old machine could be used for another 8 years. A new machine is available that would cost $120.000. The projected costs with the new machine are: Unit costs Labor 0.20 Variable other 0.15 Fixed overheads 0.25 Total 0.60 The fixed overhead costs are allocations from other departments. Repair costs, $5,000/year, are the same for both machines. The old machine can be sold on the open market now for $40.000. Eight years from now it is expected to have a salvage value of $15,000. The old machine is fully depreciated. The new machine has an expected life of 8 years and an expected salvage value of $60,000. It will be depreciated straight line over 8 years. The new machine will require an increase in net working capital of $10.000. The company's tax rate is 35 percent. The cost of capital is 12%. It is expected that future demand of the product will remain at 100,000 units per year. Should the new equipment be acquired? Calculate only one NPV --- the NPV of replacing the old with the new and decide