a. Diamond and Turf Inc. is considering an investment in one of two machines. The sewing machine will increase productivity from sewing 140 baseballs per hour to sewing 252 per hour. The contribution margin per unit is $0.42 per baseball. Assume that any increased production of baseballs can be sold. The second machine is an automatic packing machine for the golf ball line. The packing machine will reduce packing labor cost. The labor cost saved is equivalent to $22 per hour. The sewing machine will cost $266,100, have a seven-year life, and will operate for 1,400 hours per year. The packing machine will cost $105,400, have a seven-year life, and will operate for 1,200 hours per year. Diamond and Turf seeks a minimum rate of return of 10% on its investments.

Present Value of an Annuity of $1 at Compound Interest
Year	6%	10%	12%	15%	20%
1	0.943	0.909	0.893	0.870	0.833
2	1.833	1.736	1.690	1.626	1.528
3	2.673	2.487	2.402	2.283	2.106
4	3.465	3.170	3.037	2.855	2.589
5	4.212	3.791	3.605	3.353	2.991
6	4.917	4.355	4.111	3.785	3.326
7	5.582	4.868	4.564	4.160	3.605
8	6.210	5.335	4.968	4.487	3.837
9	6.802	5.759	5.328	4.772	4.031
10	7.360	6.145	5.650	5.019	4.192

Determine the net present value for the two machines. Use the table of present values of an annuity of $1 above. Round to the nearest dollar.

	Sewing Machine	Packing Machine
Present value of annual net cash flows	$fill in the blank 1	$fill in the blank 2
Amount to be invested	$fill in the blank 3	$fill in the blank 4
Net present value	$fill in the blank 5	$fill in the blank 6

Determine the present value index for the two machines. If required, round your answers to two decimal places.

	Sewing Machine	Packing Machine
Present value index

b. The following data are accumulated by Lone Peak Inc. in evaluating two competing capital investment proposals:

	3D Printer		Truck
Amount of investment	$52,000			$84,000
Useful life	4 years			7 years
Estimated residual value	0			0
Estimated total income over the useful life	$7,800			$36,750

Determine the expected average rate of return for each proposal. If required, round your answers to one decimal place.

3D Printer	fill in the blank 1%
Truck	fill in the blank 2%