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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 on

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 6 years of remaining life. Its current book value is $2,400, and it can
be sold for $2,500 at this time. Thus, the annual depreciation expense is $2,4006=$400 per year. If the old machine is not
replaced, it can be sold for $500 at the end of its useful life.
Dauten is offered a replacement machine which has a cost of $10,000, an estimated useful life of 6 years, and an estimated salvage
value of $800. The replacement machine is eligible for 100% bonus depreciation at the time of purchase. The replacement machine
would permit an output expansion, so sales would rise by $800 per year; even so, the new machine's much greater efficiency would
cause operating expenses to decline by $1,000 per year. The new machine would require that inventories be increased by $2,500, but
accounts payable would simultaneously increase by $800. Dauten's marginal federal-plus-state tax rate is 25%, and its WACC is 11%.
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?
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