The Sweetwater Candy Company would like to buy a new machine1 answer below »

The Sweetwater Candy Company would like to buy a new machine that would automatically "dip" chocolates. The dipping operation is currently done
largely by hand. The machine the company is considering costs $81,000. The manufacturer estimates that the machine would be usable for eight
years but would require the replacement of several key parts at the end of the fifth year. These parts would cost $6,600, including
installation. After eight years, the machine could be sold for $6,100.

The company estimates that the cost to operate the machine will be $11,500 per year. The present method of dipping chocolates costs $48,000 per
year. In addition to reducing costs, the new machine will increase production by 4,000 boxes of chocolates per year. The company realizes a
contribution margin of $0.7 per box. A 9% rate of return is required on all investments. (Ignore income taxes.)

Annual net cash inflows- $39300

Requirement 2:

Compute the new machine's net present value. Use the incremental cost approach.

Net present value-$ ______________ round to nearest dollar

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