Question $4$

A machine was purchases $10$ years ago at a cost of RM$15000.$ The expected life of the machine was $15$ years. Its salvage value was and is still zero. The machine is depreciated using the straight$-$line basis. A new machine can be purchased for RM$24000,$ which will result in cost savings for the firm of RM$6000$ per annum over the $5$ year useful life. The new machine can be sold for RM$4000$ in $5$ years time. The old machines market value is RM$2000,$ which is below its RM$5000$ book value. If the new machine is purchased, the existing one will be sold immediately. The tax rate is $28\%.$ Net working capital requirements will increase by RM$2000$ at the time of replacement. The new machine falls into the $3-$year MACRS class $($Depreciation in Year $133\%$; Year $245\%$; Year $315\%$; and, Year $4-7\%$ on costs$).$ The cost of capital is $12\%.$

Determine the NPV of the replacement decision.