The Sea Pines Company is planning to spend $45,000 for modernized production equipment. It will replace equipment that has zero book value and no salvage value, although the old equipment would last another seven years. 

The new equipment will save $13,500 in cash operating costs for each of the next seven years, at which time it will be sold for $4,000. A major overhaul costing $5,000 will occur at the end of the fourth year; the old equipment would require no such overhaul. The entire cost of the overhaul is deductible for tax purposes in the fourth year. The equipment is in Class 39 at a rate of 30 percent declining balance for tax purposes. 

The minimum desired rate of return after taxes is 12 percent. The applicable income tax rate is 40 percent. Compute the after-tax net present value. Is the new equipment a desirable investment?