The Darlington Equipment Company purchased a machine 5 years ago at a cost of $90,000. The machine had an expected life of 10 years at the time of purchase, and it is being depreciated by the straight-line method by $9,000 per year. If the machine is not replaced, it can be sold for $10,000 at the end of its useful life.

A new machine 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. Sales are not expected to change. At the end of its useful life, the machine is estimated to be worthless. The new machine is eligible for 100% bonus depreciation at the time of purchase.

The old machine can be sold today for $50,000. The firm's tax rate is 25%. The appropriate WACC is 9%.

a.... If the new machine is purchased, what is the amount of the initial cash flow at Year 0 after bonus depreciation is considered? Cash outflow should be indicated by a minus sign. Round your answer to the nearest dollar.

$

b. What are the incremental cash flows that will occur at the end of Years 1 through 5? Round your answers to the nearest dollar.

Year 1 Year 2 Year 3 Year 4 Year 5

$ $ $ $ $

c. What is the NPV of this project? Do not round intermediate calculations. Round your answer to the nearest cent.

$

d. Should Darlington replace the old machine?

Yes or No?