1) Prepare a net-present-value analysis of Randis replacement decision, assuming an 10% hurdle rate and no income taxes. Should the machinery be acquired? (Negative amounts should be indicated by a minus sign. Round calculations to the nearest dollar.)

Randi Corp. is considering the replacement of some machinery that has zero book value and a current market value of $4,700. One possible alternative is to invest in new machinery that costs $31,900. The new equipment has a 5-year service life and an estimated salvage value of $5,400, will produce annual cash operating savings of $11,300, and will require a $4,100 overhaul in year 3. The company uses straight-line depreciation. Year FV of $1 at 10% 1.100 1.210 1.331 1.464 1.611 1.772 FV of an ordinary annuity at 10% 1.000 2.100 3.310 4.641 6.105 7.716 PV of $1 at 10% 0.909 0.826 0.751 0.683 0.621 0.564 PV of an ordinary annuity at 10% 0.909 1.735 2.486 3.169 3.790 4.354 Required: Prepare a net-present-value analysis of Randi's replacement decision, assuming an 10% hurdle rate and no income taxes. Should the machinery be acquired? (Negative amounts should be indicated by a minus sign. Round calculations to the nearest dollar.) Purchase of net machine Sale of old machine Cash operating savings Overhaul Salvage value Total If the machinery should be acquired