Pilot Plus Pens is deciding when to replace its old machine.The machine'scurrent salvage value is $2.2 million.Its current book value is $1.4 million.Ifnot sold, the old machine will require maintenance costs of $845,000 at theend of the year for next five years.Depreciation on the old machine is$280,000 per year.At the end of 5 years, it will have a salvage value of$120,000 and a book value of $0.A replacement machine costs $4.3 millionnow and requires maintenance costs of $330,000 at the end of year during itseconomic life of 5 years.At the end of five years, the new machine will have asalvage value of 800,000.It will be fully depreciated by the straight-linemethod.In five years a replacement machine will cost $3,200,000.Pilot willneed to purchase this machine regardless of what choice it makes today.Thecorporate tax is 40 percent and the appropriate discount rate is 8 percent.Thecompany is assumed to earn sufficient revenues to generate tax shields fromdepreciation.Should Pilot plus Pens replace the old machine now or at the end of 5 years?