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The Darlington Equipment Company purchased a machine 5 years ago, prior to the TCJA, at...

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Finance

The Darlington Equipment Company purchased a machine 5 years ago, prior to the TCJA, at a cost of $80,000. The machine had an expected life of 10 years at the time of purchase, and it is being depreciated by the straight-line method by $8,000 per year. If the machine is not replaced, it can be sold for $15,000 at the end of its useful life.

A new machine can be purchased for $170,000, including installation costs. During its 5-year life, it will reduce cash operating expenses by $55,000 per year. Sales are not expected to change. At the end of its useful life, the machine is estimated to be worthless. The new machine is eligible for 100% bonus depreciation at the time of purchase.

The old machine can be sold today for $50,000. The firm's tax rate is 25%. The appropriate WACC is 9%.

What are the incremental cash flows that will occur at the end of Years 1 through 5? Round your answers to the nearest dollar.

Year 1 Year 2 Year 3 Year 4 Year 5
$ $ $ $ $

What is the NPV of this project? Do not round intermediate calculations. Round your answer to the nearest cent. $

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