Chapter 12 - EOC Questions (CNOW) 0 Assignment: Chapter 12 - EOC Questions (CNOW) Assignment Score: 61.69% Save Submit Assignment for Grading Questions Problem 12.10 (Replacement Analysis) Question 4 of 11 2. Check My Work (1 remaining) 3. 4 eBook 5. 6. c 7. 8. The Dauten Toy Corporation currently uses injection molding machine that was purchased prior to the new tax legislation. This machine is being depreciated on a straight-line basis, and it has 6 years of remaining life. Its current book value is $2,100, and it can be sold for $2,500 at this time. Thus, the annual depreciation expense is $2,100/6 = $350 per year. If the old machine is not replaced, it can be sold for $500 at the end of its useful life. Dauten is offered a replacement machine which has a cost of $9,000, an estimated useful life of 6 years, and an estimated salvage value of $800. The replacement machine is eligible for 100% bonus depreciation at the time of purchase. The replacement machine would permit an output expansion, so sales would rise by $800 per year; even so, the new machine's much greater efficiency would cause operating expenses to decline by $1,500 per year. The new machine would require that inventories be increased by $2,000, but accounts payable would simultaneously increase by $800. Dauten's marginal federal-plus-state tax rate is 25%, and its WACC is 11%. What is the NPV of the incremental cash flow stream? Negative value, if any, should be indicated by a minus sign. Round your answer to the nearest cent. $ 10. 11. Should the company replace the old machine? Yes vg Hide Feedback Partially Correct Check My Work (1 remaining)