Ayayai Vita produces a wide range of herbal supplements sold nationwide through independent distributors. In response to an increasing demand for its products, the company is considering the purchase of a new packaging machine to replace the seven-year-old machine currently in use. The new machine will cost $173,800, and installation will require an additional $3,225. The machine has a useful life of 10 years and is expected to have a salvage value of $3,800 at that time. The variable cost to operate the new machine is $11.50 per carton compared to the current machines variable cost of $11.60 per carton, and Ayayai Vita expects to pack 256,000 cartons each year. If the new machine is purchased, Ayayai Vita will avoid a required $11,300 overhaul of the current machine in four years. The current machine has a market value of $13,000.

(a) Calculate the net present value of the new packaging machine. Assume that Ayayai Vita uses a 10% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 2 decimal places, e.g. 58,971.75. Enter negative amount using a negative sign preceding the number, e.g. -59,991 or parentheses e.g.

b) Do you recommend that Ayayai Vita purchase the new machine? (

c) Assume that Burger has adopted a new 12% discount rate. Calculate the net present value of the new packaging machine. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 2 decimal places, e.g. 58,971.75. Enter negative amount using a negative sign preceding the number, e.g. -59,991 or parentheses e.g.

Do you recommend that Ayayai Vita purchase the new machine?