Your firm is considering replacing a machine. The new machine costs $$25,000.$

The old machine has a book value of $$10,000$ and can be sold today for $$4,500.$

The annual depreciation on the old machine is $$3,800.$ Both the new machine and

the machine being replaced have a remaining useful life of five years and would

be worthless at the end of that time. The new machine will save the firm $$2,750$

per year in operating costs over the coming five years. If the tax rate is $21\%$ and

the cost of capital is $6\mathrm{.}5\%,$ what is the NPV of the replacement decision? Should

the firm replace the machine or not?