$1.$ The Dauten Toy Corporation currently uses an injection molding machine that was purchased $2$years ago. This machine is being depreciated on a straight$-$line basis, and it has $6$ years ofremaining 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, itcan be sold for $$500$ at the end of its useful life. Dauten is offered a replacement machine whichhas a cost of $$8,000,$ an estimated useful life of $6$ years, and an estimated salvage value of $$800.$This machine falls into the MACRS $5-$year class so the applicable depreciation rates are $20\%,32\%,19\%,12\%,11\%,$ and $6\%.$ The replacement machine would permit an output expansion, sosales would rise by $$1,000$ per year; even so$,$ the new machines much greater efficiency wouldcause operating expenses to decline by $$1,500$ per year. The new machine would require thatinventories be increased by $$2,000,$ but accounts payable would simultaneously increase by $$500.$Dautens marginal federal$-$plus$-$state tax rate is $40\%,$ and its WACC is $11\%.$ Should it replace theold machine?