P12.2 Ray Inc. is considering replacing an existing machine with a new machine. The existing machine originally cost $45,000 and has a book value of $22,000 today. The existing machine cost $37,000 per year to operate and can be sold today for $20,000. The cost of the new machine is $40,000 and will be depreciated at the following IRS rates: Year 1 33.33% Year 2 44.45 Year 3 14.81 Year 4 7.41 The new machine is expected to cost $26,000 per year to operate. Ray's cost of capital is 15% and its tax rate is 30%. Calculate the NPV. Should Ray replace its machine? Explain your