Answer please

CENGAGE MINDTAP Q Search this course Ch 11: Post-Assessment - Cash Flow Estimation and Risk Analysis X

CENGAGE I MINDTAP Ch 11: Post-Assessment - Cash Flow Estimation and Risk Analysis Search this course < Back to Assignment Attempts: Score: / 10 2. Problem 11-09 (Replacement Analysis) eBook Replacement Analysis a Problem Walk-Through itte Gilbert Instrument Corporation is considering replacing the wood steamer it currently uses to shape guitar sides. The steamer has 6 years of remaining life. If kept, the steamer will have depreciation expenses of $600 for 5 years and $310 for the sixth year. Its current book value is $3,310, and it can be sold on an Intemet auction site for $3,96 9t this time. If the old steamer is not replaced, it can be sold for $800 at the end of its useful life Gilbert is considering purchasing the Side Steamer 3000, a higher-end steamer, which costs $12,100, and has an estimated useful life of 6 years with an estimated salvage value $1,400. This steamer falls into the MACRS 5-years class, so the applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. The new steamer is faster and allows for an output expansion, so sales would rise by $2,000 per year; the new machine's much greater efficiency would reduce operating expenses by $1,900 per yea To support the greater sales, the new machine would require that inventories increase by $2,900, but accounts payable would simultaneously increase by $700. Gilbert's margina Vederal-plus-state tax rate is 25%, and the project cost of capital is 11"' What is the NPV of the project? Do not round intermediate calculations. Round your answer to the nearest dollar. Should it replace the old steamer? The old steamer -select- be replaced.