Blue Spruce 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 $150,050, and installation will require an additional $2,725. The machine has a useful life of 10 years and is expected to have a salvage value of $4,465 at that time. The variable cost to operate the new machine is $8.65 per carton compared to the current machines variable cost of $8.75 per carton, and Blue Spruce Vita expects to pack 236,000cartons each year. If the new machine is purchased, Blue Spruce Vita will avoid a required $8,925 overhaul of the current machine in four years. The current machine has a market value of $11,575. Click here to view the factor table. (a) Calculate the net present value of the new packaging machine. Assume that Blue Spruce Vita uses an 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. (59,991).)

Net present value

$enter the net present value in dollars

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

select an option YesNo

(c) Assume that Blue Spruce Vita has adopted a new 14% 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. (59,991).)

Net present value

$enter the net present value in dollars

Do you recommend that Blue Spruce Vita purchase the new machine?

select an option YesNo