The We-Make-It-Quick company, maker of electronic components, is considering replacing one of its current hand-operated assembly machines with a new fully automated machine. This replacement would mean the elimination of one employee, generating salary and benefit savings. Given the following information, determine the OPERATING cash flows per year associated with this replacement.

Existing situation: (Old machine)
One full-time machine operator	salary and benefits, $9,000.00 per year
Cost of maintenance and upkeep	$4,000.00 per year
Cost of product defects	$4,000.00 per year
Original depreciable value of old machine	$35,000.00
Annual depreciation	$1,750.00 per year
Expected life	20 years
Age today	10 years old
Expected salvage value in 5 years	$0.00
Current salvage value	$28,000.00
Marginal tax rate	.34
Proposed situation: (New Machine)
Fully automated machine	no operator required
Cost of machine	$39,000.00
After-tax installation fee	$4,000.00
After-tax shipping fee	$3,000.00
Cost of maintenance and upkeep	$3,000.00 per year
Cost of product defects	$4,000.00 per year
Expected life	10 years
Salvage value	$11,000.00
Depreciation method	simplified straight-line method over life of machine