Replacement Analysis The 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 steaner will have depreciation expenses of $600 for 5 years and $305 for the sixth year. Its current book value is $3,305, and it can be sold on an Internet auction site for $3,835 at 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 $11,000, and has an estimated useful life of 6 years with an estimated salvage value of S1,600. 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 $1.600 per year. 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 marginal federal-plus-state tax rate is 40%, and the project cost of capital is 15%. What is the NPV of the project? Should the old steamer be replaced? Do not round intermediate calculations. Round your answer to the nearest dollar. Cash flow in Year 0 Operating cash flows Year 1 through 6 -Change in depreciation Yea New Machine Basis New Machine Depreciation New- Old Old Machine Depreciation Tax Savings 1 3 4 5 6 6 -Change in after-tax income -Operating cash flows Yea Change in after-tax Change in after-tax OCF income depreciation 1 2 3 4 5 Net salvage cash flow in Year 6 Project CFs: 2 Year 0 1 2 3 5 Init investment Net OCF ANWC Net salvage CF Project net CF NPV: Replace: Y/N