X EOC 11 HWb Assignment: EOC 11 HWb Assignment Score: 4.70% Save Submit Assignment for Grading Question 1 of 3 Questions Problem 11-09 (Replacement Analysis) Check My Work 2 3 eBook Problem Walk-Through Replacement Analysis The Gilbert Instrument Corporation is considering replacing the wood steamer currently uses to shape guitar sides. The steamer has 6 years of remaining life. I kept, the steamer will have depreciation expenses of $700 for 5 years and $320 for the sixth year. Its current book value is $3,820, and it can be sold on an internet auction site for $4,410 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 $12,400, and has an estimated useful life of 6 years with an estimated salvage value of $1,400. 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 $1,700 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 25%, and the project cost of capital is 13% What is the NPV of the project? Do not round intermediate calculations, Round your answer to the nearest dollar $ Should it replace the old steamer? The old steamer Select be replaced Check My Work Ofron Key Problem 11-09 (Heplacement Analysis) Question 3 of 3 Submit Assignment for Grading Save 70 W M P . 21 ***