Carla Vista Inc. manufactures snowsuits. Carla Vista is considering purchasing a new sewing machine at a cost of $$2\mathrm{.}45$ million. Its

existing machine was purchased $5$ years ago at a price of $$1\mathrm{.}8$ million; six months ago, Carla Vista spent $$55,000$ to keep it operational.

The existing sewing machine can be sold today for $$241,380.$ The new sewing machine would require a one$-$time, $$85,000$ training

cost$.$ Operating costs would decrease by the following amounts for years $1$ to $7$ :

The new sewing machine would be depreciated according to the declining$-$balance method at a rate of $20\%.$ The salvage value is

expected to be $$380,000.$ This new equipment would require maintenance costs of $$96,200$ at the end of the fifth year. The cost

capital is $9\%.$

Click here to view the factor table.

Use the net present value method to determine the following: $($If net present value is negative then enter with negative sign preceding the

number e$.$g$.-45$ or parentheses e$.$g$.(45).$ Round present value answer to $0$ decimal places, e$.$g$.125.$ For calculation purposes, use $5$ decimal

places as displayed in the factor table provided.$)$

Calculate the net present value.Click here to view the factor table.

Use the net present value method to determine the following: $($If net present value is negative then enter with negative sign preceding the

number e$.$g$.-45$ or parentheses e$.$g$.(45).$ Round present value answer to $0$ decimal places, e$.$g$.125.$ For calculation purposes, use $5$ decimal

places as displayed in the factor table provided.$)$

Calculate the net present value.

Net present value $

Determine whether Carla Vista should purchase the new machine to replace the existing machine?

TABLE $3$ Present Value of $1$

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