8) A m/c was bought 4 years ago for $20,000. SL depreciation has been used with B=$20,000, N=5years, S=$0. A replacement is been considered. A new m/c can be bought for $10,000 to replace the old one. 100% bonus depreciation will be used for the new m/c with B=$10,000, N=5 years, S=$0. The new m/c will be used for 2years and then can be sold for $5,000. The new m/c will save $6,000/yr in operation cost. The old m/c can be sold for $5,000 right now, or kept in use for 2more years and then will be sold for $2,000. Incremental combined tax rate is50%, after-tax MARR is 10%. Calculate APW of the replacement.

Fig: 1