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X Company is considering replacing one of its machines in order to save operating costs. The following information is available: Current machine Current sales value

X Company is considering replacing one of its machines in order to save operating costs. The following information is available:

Current machine
Current sales value $7,000
Final sales value 0
Operating costs 68,000
New machine
Purchase cost $72,000
Final sales value 2,500
Operating cost savings 22,000

Both machines will last for 4 more years.

Assuming a discount rate of 4%, what is the incremental net present value of replacing the current machine with the new machine?

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