Alpha Manufacturing has an existing machine (book value ₹20 lakhs, remaining life 5 years, no salvage). A new machine costs ₹50 lakhs, has a 5-year life, and will save ₹15 lakhs annually in operating costs. The new machine can be sold for ₹5 lakhs after 5 years. Tax rate 30%. Cost of capital 10%. Straight-line depreciation. Should Alpha buy the new machine?
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