A company is considering replacing a machine on a production line to reduce operating costs. The equipment to be replaced was purchased two years ago for $1,000,000 and can be sold for $700,000.
The machine to be replaced can be used for five more years, after which it can be sold for $100,000.
The machine's operating costs are $800,000 annually. The company pays 10% taxes on profits.
The new machine is worth $1,600,000 and can be used for five years before having to be replaced and in five years it can be sold for $240,000.
During the period of use, it will allow to reduce the operating costs associated with the machine by $300,000 annually.
The current machine will not be used and will be sold.
All equipment depreciates annually by 20% of its value from the time of purchase.
Ask
Project the cash flow of the current situation
Project cash flow with machine replacement
Compare the alternatives and make a decision if it is worth replacing the machine.
Please, I need this step by step in Spanish.