Ball Sports Inc. is considering an investment in one of two machines. The stitching machine will increase productivity from sewing 190 baseballs per hour to stitching 340 per hour. The contribution margin is $0.50 per baseball. Assume that any increased production of baseballs can be sold. The second machine applies a synthetic balata cover to golf balls. The golf ball machine will reduce labor cost. The labor cost saved is equivalent to $22 per hour. The stitching machine will cost $391,000, have an an eight-year life, and will operate for 1,400 hours per year. The golf ball machine will cost $98,300, have an an eight-year life, and will operate for 1,200 hours per year. Ball Sports Inc. seeks a minimum rate of return of 15% 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 a. Determine the net present value for the two machines. Use the table of present values of an annuity of $1 above. If required, round to the nearest dollar. Stitching Machine Golf Ball Machine Present value of annual net cash flows $fill in the blank 1 $fill in the blank 2 Less 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 b. Determine the present value index for the two machines. Round to two decimal places. Stitching Machine Golf Ball Machine Present value index fill in the blank 7 fill in the blank 8

Ball Sports Inc. is considering an investment in one of two machines. The stitching machine will increase productivity from sewing 190 baseballs per hour to stitching 340 per hour. The contribution margin is $0.50 per baseball. Assume that any increased production of baseballs can be sold. The second machine applies a synthetic balata cover to golf balls. The golf ball machine will reduce labor cost. The labor cost saved is equivalent to $22 per hour. The stitching machine will cost $391,000, have an an eight-year life, and will operate for 1,400 hours per year. The golf ball machine will cost $98,300, have an an eight-year life, and will operate for 1,200 hours per year. Ball Sports Inc. seeks a minimum rate of return of 15% 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

a. Determine the net present value for the two machines. Use the table of present values of an annuity of $1 above. If required, round to the nearest dollar.

	Stitching Machine		Golf Ball Machine
Present value of annual net cash flows	$fill in the blank 1		$fill in the blank 2
Less 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

b. Determine the present value index for the two machines. Round to two decimal places.

	Stitching Machine	Golf Ball Machine
Present value index	fill in the blank 7	fill in the blank 8