the gilbert instrument corporation is considering replacing the wood steamer it currently uses to shape guitar sides. the steamer has 6 years of remaining life. if kept, the steamer will have depreciation expenses of $700 for 5 years and $350 for the sixth year. its current book value is $3,850, and it can be sold on an internet auction site for $4,440 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 $12,900 and has an estimated useful life of 6 years with an estimated salvage value of $1,200. 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 $1,600 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 12%. 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.
