PROBLEM: I1-18A Net Present Value; Total and Incremental Approaches [LO1] Eastbay Hospital has an auxiliary generator that is used when power failures occur. The generator is worn out and must be either overhauled or replaced with a new generator. The hospital has assembled the following information: CHECK FIGURE (1) NPV in favor of the new generator: $14,635 If the company keeps and overhauls its present generator, then the generator will be usable for eight more years. If a new generator is purchased, it will be used for eight years, after which it will be replaced. The new generator would be diesel-powered, resulting in a substantial reduction in annual operating costs. as shown above. The hospital computes depreciation on a straight-line basis. All equipment purchases are evaluated using a 16% discount rate. Required: (Ignore income taxes.) 1. Should Eastbay Hospital keep the old generator or purchase the new one? Use the total-cost approach to net present value in making your decision. 2. Redo (1) above, this time using the incremental-cost approach