Hillsong Inc Manufactures Snowsuits Hillsong Is Considering Purchasing A New Sewing Machine At A Cost Of 2 45 Million 1 (46.41 KiB) Viewed 32 times
Hillsong Inc Manufactures Snowsuits Hillsong Is Considering Purchasing A New Sewing Machine At A Cost Of 2 45 Million 2 (49.08 KiB) Viewed 32 times
Hillsong Inc. manufactures snowsuits. Hillsong is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million; six months ago, Hillsong spent $55,000 to keep it operational. The existing sewing machine can be sold today for $241,702. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7: Year 1 $390,100 2 400,600 3 410,600 4 4 425,000 5 432,900 6 434,500 7 436,400 The new sewing machine would be depreciated according to the declining-balance method at a rate of 20%. The salvage value inexpected to
be $379,900. This new equipment would require maintenance costs of $94,600 at the end of the fifth year. The cost of capital is 9%. Click here to view the factor table. Use the net present value method to determine the following: (If net present value is negative then enter with negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round present value answer to 0 decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Calculate the net present value. Net present value $ 3759 Determine whether Hillsong should purchase the new machine to replace the existing machine? V No
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