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Is uses an injection ne is being depreciated rent book value is 52,10 ation expense is $2,1006 500 at the end of d. Should the machine be pullul 12-10 REPLACEMENT ANALYSIS The Dauten Toy Corporation currently the ing machine that was purchased 2 years ago. This machine is bei straight-line basis, and it has 6 years of remaining life. Its current book it can be sold for $2,500 at this time. Thus, the annual depreciation es $350 per year. If the old machine is not replaced, it can be sold for $500 useful life. Dauten is offered a replacement machine which has a cost of $8.00 useful life of 6 years, and an estimated salvage value of $800. This mach MACRS 5-year class so the applicable depreciation rates are 20%, 32% and 6%. The replacement machine would permit an output expansions rise by $1,000 per year; even so, the new machine's much greater efficiens operating expenses to decline by $1,500 per year. The new machine would inventories be increased by $2,000, but accounts payable would simultaneously in by $500. Dauten's marginal federal-plus-state tax rate is 40%, and its WACC is 11% She it replace the old machine? of $8,000, an estimated is machine falls into 0% 32%, 19%, 12%, 11. expansion, so sales woda er efficiency would cause achine would require that