Assume that a company is choosing between two alternatives$$keep an existing machine or replace it with a new machine. The costs associated with the two alternatives are summarized as follows:

Existing Machine New Machine

Purchase cost $($new$)$ $ $15,000$ $ $22,000$

e the appropriate discount factor$($s$)$ using the tables provided.

Assume that a company is considering a $$2,600,000$ capital investment in a project that would earn net income for each of the next five years as follows:

Sales $ $1,900,000$

Variable expenses $800,000$

Contribution margin $1,100,000$

Fixed expenses:

Out$-$of$-$pocket operating costs $ $300,000$

Depreciation $400,000700,000$

Net operating income $ $400,000$

Click here to view Exhibit $7$B$-1$ and Exhibit $7$B$-2,$ to determine the appropriate discount factor$($s$)$ using the tables provided.

If the company$$s discount rate is $20\%,$ then the project$$s net present value is closest to:

Multiple Choice

$$(1,403,600).$

$$(207,200).$

$$(156,900).$

$$190,610.$