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The Dauten Toy Corporation currently uses an injection molding machine that was purchased prior to the new tax legislation . This machine is being depreciated
The Dauten Toy Corporation currently uses an injection molding machine that was purchased prior to the new tax legislation This machine is being depreciated on a straight line basis and it has years of remaining life Its current book value is $ and it can be sold for $ at this time Thus the annual depreciation expense is $ $ per year If the old machine is not replaced it can be sold for $ at the end of its useful life Dauten is offered a replacement machine which has a cost of $ an estimated useful life of years and an estimated salvage value of $ The replacement machine is eligible for bonus depreciation at the time of purchase The replacement machine would permit an output expansion so sales would rise by $ per year ; even so the new machine's much greater efficiency would cause operating expenses to decline by $ per year The new machine would require that inventories be increased by $ but accounts payable would simultaneously increase by $ Dauten's marginal federal plus state tax rate is and its WACC is What is the NPV of the incremental cash flow stream Negative value if any should be indicated by a minus sign Round your answer to the nearest cent $Should the company replace the old machine Select
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