Earning a college degree has some well-known and well-documented advantageous impacts on an individual. That is the motivation for people to delay their entry into the workforce for four or five years while they earn a baccalaureate degree. However, studies have shown significant positive impacts on the community, the state, and society caused by higher education. For example, states with more college-educated people also display better health conditions, higher earnings, lower crime, more innovation, and a general increased standard of living. In the language of our current module, higher education is a positive externality. The person deciding to attend college is doing it for the benefits she will receive from this new knowledge and experience. However, it is also true that there will be positive spillover effects on her community and state

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 depreciaiton expenses of $650 for five years and $325 for the sixthyear. its current book value is $3,575, and it can be sold on an internet auction site for$4,150 at this time. if the old steamer is not replaced, it can be sold for $800 at the endof its useful life. gilbert is considering purchasing the side steamer 3000, a higher-end steamer, whichcosts $12,000 and has an estimated useful life of 6 years with an estimated salvage value of$1,500. this steamer falls into the macrs 5-year class, so the applicable depreciationrates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. the new steamer is fasterand allows for an output expansion, so sales would rise by $2,000 per year; the newmachine's much greater efficiency would reduce operating expenses by $1,900 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 marginalfederal-plus-state tax rate is 40%, and its wacc is 15%.a. should it replace the old steamer? b. npv of replace = $2,083.51