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QUESTION 25 The Stuart Gates & Fences Corporation is considering replacing the metal cutting machine (cutter) it currently uses to Cut metal to make fences. The metal cutter has 6 years of remaining life. If kept, the metal cutter will have depreciation expenses Of for five years and $700 for the sixth year. Its current book value is $5,500 and it can be sold on ebayfor $6,500 at this time. If the Old metal cutter is not replaced. it can be sold for $1,000 at the end Of its useful life. Stuart co. is considering purchasing the Fast Cutter XL, a higher-end metal cutter. which costs S 15.000 and has an estimated useful life of 6 years with an estimated salvage value Of $2,000. This metal cutter falls into the MACRS 5-year class, so the applicable depreciation rates are 19.20%, II _52%, and 5.76%. The new cutter is faster and allows for an output expansion, so sales would rise by $2,500 per year; the new machine's much greater efficiency would reduce operating expenses by Sl ,500 per year. To support the greater sales, the new machine would require that inventories increase by $3,000, but accounts payable would simultaneously increase by Sl .000. Stuart's marginal federal-plus-state tax rate is 25%. and its WACC iS 12%. How much is the year 1 operating cash flow?