Blue Corp. is planning to replace an old asset with new equipment that will operate more efficiently. The following amounts may be relevant to this analysis.

Cost of old asset $12,500

Book value of old asset $2,000

Selling price of old asset $2,000

Purchase price of new replacement asset $18,500

Estimated salvage value of new asset $2,000

Estimated useful life of new asset 5 years

Estimated annual net operating cash inflows $2,700 /year for 5 years

Discount rate 11% Tax rate 20% Determine which amounts listed are relevant cash flows for Blue Corp. as it considers this asset sale and replacement. Cost of old asset Irrelevant Book value of old asset Irrelevant Selling price of old asset Irrelevant Purchase price of new replacement asset Relevant Estimated salvage value of new asset Relevant Estimated annual net operating cash inflows Relevant

Then, find the NPV of the new investment. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places e.g. 5,125.36. Enter negative amounts using either a negative sign preceding the number, e.g. -5,125.36 or parentheses, e.g. (5,125.36).) Click here to view the factor table

NPV

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