Answer Happy

Sunland Inc. manufactures snowsuits. Sunland is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased 5 years ago at a price of $1.8 million; six months ago, Sunland spent $55,000 to keep it operational. The existing sewing machine can be sold today for $244,395. 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 $389,500 2 400,400 3 410,500 4 425,400 5 433,000 6 435,400 7 436,600 The new sewing machine would be depreciated according to the declining-balance method at a rate of 20%. The salvage value is expected to be $379,200. This new equipment would require maintenance costs of $98,000 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 eg. -45 or parentheses e.g (45). Round present value answer to decimal places, eg. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Calculate the net present value. Net present value $
TABLE 1 Future Value of 1 (n) Periods 0 1 2 3 4 5 ONmir 6 7 8 9 10 O 000 4% 5% 1.00000 1.00000 1.04000 1.05000 1.08160 1.10250 1.12486 1.15763 1.16986 1.21551 1.21665 1.27628 1.26532 1.34010 1.31593 1.40710 1.36857 1.47746 1.42331 1.55133 1.48024 1.62889 1.53945 1.71034 1.60103 1.79586 1.66507 1.88565 1.73168 1.97993 1.80094 2.07893 1.87298 2.18287 1.94790 2.29202 2.02582 2.40662 2.10685 2.52695 2.19112 2.65330 6% 7% 1.00000 1.00000 1.06000 1.07000 1.12360 1.14490 1.19102 1.22504 1.26248 1.31080 1.33823 1.40255 1.41852 1.50073 1.50363 1.60578 1.59385 1.71819 1.68948 1.83846 1.79085 1.96715 1.89830 2.10485 2.01220 2.25219 2.13293 2.40985 2.26090 2.57853 2.39656 2.75903 2.54035 2.95216 2.69277 3.15882 2.85434 3.37993 3.02560 3.61653 3.20714 3.86968 8% 1.00000 1.08000 1.16640 1.25971 1.36049 1.46933 1.58687 1.71382 1.85093 1.99900 2.15892 2.33164 2.51817 2.71962 2.93719 3.17217 9% 1.00000 1.09000 1.18810 1.29503 1.41158 1.53862 1.67710 1.82804 1.99256 2.17189 2.36736 2.58043 2.81267 3.06581 3.34173 3.64248 3.97031 4.32763 4.71712 5.14166 5.60441 10% 11% 12% 1.00000 1.00000 1.00000 1.10000 1.11000 1.12000 1.21000 1.23210 1.25440 1.33100 1.36763 1.40493 1.46410 1.51807 1.57352 1.61051 1.68506 1.76234 1.77156 1.87041 1.97382 1.94872 2.07616 2.21068 2.14359 2.30454 2.47596 2.35795 2.55803 2.77308 2.59374 2.83942 3.10585 2.85312 3.15176 3.47855 3.13843 3.49845 3.89598 3.45227 3.88328 4.36349 3.79750 4.31044 4.88711 4.17725 4.78459 5.47357 4.59497 5.31089 6.13039 5.05447 5.89509 6.86604 5.55992 6.54355 7.68997 6.11591 7.26334 8.61276 6.72750 8.06231 9.64629 15% 1.00000 1.15000 1.32250 1.52088 1.74901 2.01136 2.31306 2.66002 3.05902 3.51788 4.04556 4.65239 5.35025 6.15279 7.07571 8.13706 9.35762 10.76126 12.37545 14.23177 16.36654 11 12 13 14 15 16 17 18 19 20 3.42594 3.70002 3.99602 4.31570 4.66096