Problem 11-13 Replacement Analysis The Everly Equipment Company's flange lipping machine was purchased 5 years ago for $90,000. It had an expected life of 10 years when it was bought and its remaining depreciation is $9,000 per year for each year of its remaining life. As older flange-lippers are robust and useful machines, this one can be sold for $20,000 at the end of its useful life. A new high efficiency digital controlled flange lipper can be purchased for $150,000, including installation costs. During its 5 year life, it will reduce cash operating expenses by $45,000 per year, although it will not affect sales. At the end of its useful life, the high-efficiency machine is estimated to be worthless. MACRS depreciation will be used, and the machine will be depreciated over its 3- year class life rather than its 5-year economic life, so the applicable depreciation rates are 33.33%, 14.45%, 14.81%, and 7.41%. The old machine can be sold today for $55,000. The firm's tax rate is 35%, and the appropriate cost of capital is 12%. a. If the new flange-lipper is purchased, what is the amount of the initial cash flow at Year O? Round your answer to the nearest whole dollar. 98500 X 5 b. What are the incremental net cash flows that will occur at the end of Years 1 through 5? Do not round Intermediate calculations. Round your answers to the nearest whole dollar. CF1 38927 CF2 $ 39410 CF3 $ 24112 CF4 19059 CF5 $ 14810 C. What is the NPV of this project? Do not round intermediate calculations. Round your answer to the nearest whole dollar. $ 5352 Should Everly replace the flange-lipper? Yes