33 Table 11.5 Nuff Folding Box Company, Inc. ils considering purchasing a new gluing machine The gluing machine costs $50,000 and requires installation costs of $2,500. This outlay would be partially offset by the sale of an existing gluer. The existing gluer originally cost $10,000 and is four years old. It is being depreciated under MACRS using a five-year recovery schedule and can currently be sold for $15,000. The existing gluer has a remaining useful life of five years. If held until year 5, the existing machine's market value would be zero. Over its five-year life, the new machine should reduce operating costs (excluding depreciation) by $17,000 per year. Training costs of employees who will operate the new machine will be a one-time cost of S5,000 which should be included in the initial outlay. The new machine will be depreciated under MACRS using a five- year r ecovery period. The firm has a 12 percent cost of capital and a 40 percent tax on ordinary income and capital gains. The net present value of the project is( (See Table 11.5) $3,815 ss,614 $7,500 $2,445