25.6. Cullumber Inc. manufactures snowsuits. Cullumber 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, Cullumber spent $55,000 to keep it operational. The existing sewing machine can be sold today for $241,115. 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		$389,000
	2		400,400
	3		411,000
	4		425,700
	5		433,800
	6		435,200
	7		437,500

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 $380,100. This new equipment would require maintenance costs of $95,300 at the end of the fifth year. The cost of capital is 9%. Click here to view PV 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

$enter the net present value in dollars rounded to 0 decimal places

Determine whether Cullumber should purchase the new machine to replace the existing machine?

select an option YesNo